Preamble

The House met at half-past Nine o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Gap Year Students

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Dowd.]

Mr. Nick St. Aubyn: I am grateful for the opportunity to debate gap year students. One of the great advantages of being a Member of Parliament is that one can occasionally highlight an issue that is not always in the public mind, and this is certainly one such issue. I congratulate those hon. Members who have survived the tribulations of last night on making it here this morning in one piece. I hope that we can score a few goals on behalf of students, but that is in the hands of the Minister.

The Parliamentary Under-Secretary of State for Education and Employment (Dr. Kim Howells): I am a rugby player.

Mr. St. Aubyn: That sounds ominous. Perhaps the hand of Government will be as effective as the hand of God was on another occasion.
First, I shall define gap year students. This month, if their A-level results are good enough, many students will make plans to go on to the university of their choice in the autumn. Every year, some school leavers decide to take a year out from their education programme to widen their experience and find out more about the world. Those are predominantly gap year students.
I have tried hard to get exact figures on the number of such students, but there are little data in this area. Most estimates show that 20,000 to 30,000 school leavers who intend to go to university take a gap year. However, as I shall show, a greater number may fall into that category. We should also consider students who enter university and meet students who took a gap year. They may put a gap year in their plans between leaving university and starting a full-time career.
I should declare an interest because I was a gap year student a few years ago. It was a tremendous experience, thanks to the organisation Project Trust. It was first in the field, following the decision by Voluntary Service Overseas to concentrate only on graduates. The trust started 30 years ago, and has developed programmes throughout the world specifically to enable school leavers to spend nine months to a year on structured projects that they had identified. In those 30 years, the trust has sent more than 4,000 school leavers abroad, and it has had great success. Those who go abroad for a year take on a big commitment, and the success rate says a great deal for the assessment, back-up, training and knowledge that the trust has developed.
One way in which gap year students gain experience is by self-selection. Perhaps that is why relatively few examples of poor experiences by gap year students come to light in the media. For students, it is a self-selecting experience, because the Project Trust base is on the island of Coll: applicants have to go from Glasgow to Oban to catch the island ferry early in the morning. If my memory is correct, it leaves before 7 o'clock. Anyone who faces those rigours must be willing to spend a year abroad.
The image of gap year students has perhaps limited the number who come forward. When I was applying for a project, I had in mind working on a sheep farm in Australia, on a ranch in South America with racehorses, or some such idea that one has at that stage. It was only when I was on the training and induction programme that I became interested in doing volunteer work, and I ended up as a care worker in a children's home.
In many ways, that was a life-determining opportunity for me. The striking fact—as the evidence of the Project Trust and other organisations suggests—is that that experience, if it is well structured and successful, does make a difference to the rest of volunteers' lives. Therefore, although we may be talking about only a small proportion of school leavers—the Universities and Colleges Admission Service estimates that only 6 per cent. of university applicants currently decide to take a gap year—the ones who do stand to benefit tremendously if the experience is right.
The other factor to bear in mind is that the nature of students taking gap year opportunities has changed. Seventy per cent. of the Project Trust's volunteers come from the state sector, and only 30 per cent. from the independent sector. The idea of the year off as the rich kid's luxury has gone. It is an opportunity that is and should remain open to all school leavers. However, there are problems.
The grandfather of overseas volunteering is Voluntary Service Overseas. Earlier this year, it reported that the number of its projects has had to be reduced by 10 per cent. because of a fall in applications. It sends about 2,000 people abroad on projects. That is at a time when, in the United States, with a $50 million grant from the United States Government, the number of Peace Corps volunteers—Peace Corps is a programme that was directly inspired by the example of VSO—has doubled to 10,000 a year.
There is other evidence that there has been a change in attitudes in our country, which we must do something to address. There is evidence that the number of people aged between 18 and 24 who are involved in any volunteering activity in this country has fallen in recent years. In 1991, 55 per cent. of those in that age group were involved in volunteering. Last year, that fell to 43 per cent., a drop of 1.4 million volunteers.
The new Government came to power promising the giving age, but for that age group it has become the taking age. One of the most worrying aspects of the current situation is the great increase in the burden on 18 to 24-year-olds implied by the Government's new proposals for tuition fees and for taking away the maintenance grant. I have seen correspondence between the Minister and some of the organisations in this sector making the case that those from less well-off backgrounds will not have to pay tuition fees, but, as we all know, that is only part of the package. The other part is that the maintenance grant


will be abolished, so, when they leave university, those from less well-off backgrounds will find that the debt on their shoulders will be higher than the debt of those from well-off backgrounds.
Therefore, across the board, members of that important, in many ways idealistic, age group who may want to take part in community activities, will find that the burden imposed by the Government deters them. Instead of spending a year doing voluntary activity, whether in this country or abroad, they feel that they must spend that time building their savings to help them to pay for their tuition at university.
That has clear consequences. One is that, if school leavers want to enjoy the benefits of a gap year, it is now more important than ever that they do so in a structured way, through an organisation that provides a well-founded experience. Not only will that be their best chance of ensuring that they gain the most from that experience, but, when they come on to the job market, it will be a plus with their prospective employers.
A recent survey showed that more than 50 per cent. of employers are more likely to choose a candidate who has had gap year experience; I am grateful to The Guardian of 12 August for that survey. Community Service Volunteers—the domestic equivalent of VSO—which in any year has 1,200 volunteers on its programmes, has done its own survey, which found that more than 50 per cent. of human resource directors in companies it questioned would prefer to take on an employee who had been involved in voluntary work, compared with one who had just been on a backpacking holiday of their own design.
Therefore, it is important that those programmes have a structure. There are five key issues that students and potential students should be looking for when they go on a programme. First, they should be on a programme that provides for assessment of the school leaver. That assessment will guide the school leaver into the right sort of project to suit them.
Secondly, a well-grounded programme will ensure that the projects to which the school leavers go have a correct and well-prepared specification. Thirdly, the organisation will provide sufficient training for school leavers, so that, when they go on their project, they genuinely deliver benefits to their host country and to the charity or school where they may be working, rather than becoming involved in an experience that may, for want of a better word, be nothing more than aid tourism.
Fourthly, when school leavers are on a project, that will be their first experience of being away from home for an extended period. It is important that pastoral care is available to school leavers in the country where they work. Again, the organisation should not only be able to show that it provides pastoral care, but, if the political situation becomes threatening—in many of these countries, there is often political instability—it should be aware of that and able to take school leavers out of a country as a last resort, in good time and with minimum fuss.
Lastly—in many ways, this is almost as important as all the rest—there should be proper debriefing for school leavers when they return home. There is an element of culture shock in going abroad. There is more than an element of reverse culture shock when school leavers come back to this country, particularly if they have been on a posting lasting between six months and a year.
That is why the cost of the best programmes is not cheap. Project Trust charges its volunteers £3,500 for their year's experience abroad. Gap Activity, which has been going for 25 years, is another well-established provider in the sector; it sends around 1,200 school leavers abroad a year and charges, all told, about £1,500 typically for a six-month experience abroad. Those figures sound high, but, in the case of those organisations and the other better organisations in the sector, that money is raised through sponsorship.
The organisations not only help school leavers to find sponsors, but give them some training in how to win sponsorship. The training is a part of the programmes' development of the individual, from which school leavers benefit. School leavers are successful, and achieve their sponsorship. Moreover, major British companies greatly value the results produced by the programmes, which provide volunteers with a leadership development programme as they are maturing as individuals. The required money is therefore forthcoming.
As the numbers of those going into higher education increases, and as awareness of the gap year experience and opportunity have grown, so organisations offering programmes have proliferated. It is estimated that more than 70 organisations now offer some gap year experience. However, the programmes are entirely unregulated. I shall deal with that point in more detail later.
I came across one company, for example, that employs in the United Kingdom only eight staff, who are responsible each year for almost 800 postings, lasting less than three months, for which they charge a total of about £2,000. Such programmes clearly do not provide the same value for money as those provided by the other, good organisations that I have mentioned.
The worst organisations do not provide training, or even an assessment of the school leaver and his or her suitability for a post. The image of the United Kingdom in countries where gap year students are sent will be tarnished if they show up for a few months, do not know why they are there, and perhaps return to the United Kingdom confused in their own minds, whereas people in the country involved simply think, "That's just another aid tourist who has been through our patch." That is not the image we want to project abroad.

Dr. Howells: Will the hon. Gentleman do the House and the country a favour by naming that company?

Mr. St. Aubyn: There are several such organisations, and I shall give the Minister their details later.
Such organisations pose a problem and have to be checked out. The question is whether we should regulate or offer guidance. The case against regulation is that volunteers are, as I said, a group of school leavers who are self-selecting. They have a self-awareness, and a "get up and go" that will stand them in good stead. Moreover, if they are to go abroad, they will have to have their wits about them. The problem with regulation is that it would create an extra cost for the best organisations, without providing any better value in the experience they offer.
The United Kingdom regulates similar organisations.

Mr. Phil Willis: Regulation is one of the most important aspects of the


hon. Gentleman's speech and of the point that he is trying to make. Does he accept that the appalling situation that developed after Louise Woodward went to the United States to take up a post without supervision, regulation or training shows that we have to include within guidelines not only traditional, university gap year students, but all young people who participate in a gap year experience?

Mr. St. Aubyn: The hon. Gentleman makes a very good point, and I shall certainly deal later with the Louise Woodward case.
The decision whether to regulate should be based on our experience in the United Kingdom. Until quite recently, expeditions in the UK were not regulated. Only the previous Government introduced the requirement that expeditions be regulated and use qualified staff. When those regulations were introduced, after a canoeing accident in Lulworth cove, there was a sharp drop in the number of applicants to all organisations, however well established and reputable, which put their futures at risk.
Senior and responsible organisations offering overseas gap year projects have serious concerns that, if regulations were to be introduced, a hiatus would be created during which they would suffer serious effects. Developing a specific project can take a very long time, and, once the project is up and running, it is important that the flow of able and committed volunteers continues. If the Government were to interrupt and jeopardise that flow by announcing the need for regulation, many organisations would have a difficult time keeping their show on the road.
Most of the most reputable and longest-standing organisations are charitable, and are consequently run on a very tight budget.

Mrs. Teresa Gorman: The points that my hon. Friend is making are extremely important, very serious and valid. However, I am sure that he will agree that parents who are releasing their children into organisations that will send them to foreign lands have a very big responsibility to check out those organisations to which their children will be consigned.

Mr. St. Aubyn: My hon. Friend makes a very good point, which leads on to the main point of the debate.
If parents are to investigate programmes with due vigilance, and if schools are to allow organisations into their career evenings and access to children—often the point of contact is the school's careers officer—they must have guidelines on what to expect and consider. Issuing such guidelines is the role that I think should be played by the Minister and the Department for Education and Employment—not only to ensure that the best organisations thrive, and that those that do not offer a fair deal fall by the wayside, but to endorse the idea, if the Minister is prepared to do so, of the gap year experience.
Organisations such as Project Trust and Gap Action tell me that they often visit a school to find that the school's head and teachers have no concept of a gap year. Issuing guidelines to schools would raise consciousness of gap years, and broaden the group who think that the gap year experience might be for them.

Mr. Gerald Howarth: Issuing guidelines is an interesting idea. However, further to the point raised

by my hon. Friend the Member for Billericay (Mrs. Gorman), I should like to tell my hon. Friend of my own experience when my son wanted to go to Vietnam for his gap year. As a responsible parent, I sought to discover as much about the programme as I could, and found the Foreign Office extremely helpful. I suggest to my hon. Friend that he might include as one of his proposals to the Minister that the Foreign Office should itself investigate some of the organisations, and make its knowledge available to parents before their children go abroad.

Mr. St. Aubyn: My hon. Friend also makes a very good point. Perhaps I should say how much the organisations involved in sending school leavers abroad appreciate the back-up they receive from Government—not only from Foreign Office officials in the countries involved, in helping them to identify people living locally who are prepared to help; but, in extreme situations, from the Foreign Office in performing its general role of protecting all United Kingdom citizens in political hot spots. The Foreign Office has a role to play in all those circumstances.
The Department for International Development also is very much aware of the positive aspects of the organisations, and should have an input to the Minister's Department in drawing up helpful and constructive guidelines.
The hon. Member for Harrogate and Knaresborough (Mr. Willis) mentioned the case of Louise Woodward. I am told that, when the phrase "gap year students" is mentioned to the Prime Minister, he immediately thinks of Louise Woodward. I have deferred mentioning her case until now, because I wanted to emphasise to the House that a much wider group of people is involved in the gap year experience. However, an unknown number of school leavers, who may not be going on to university, nevertheless want the gap year experience. They are being sent overseas without appropriate assessment, training or back-up, and thus run the risks which tragically led to the case involving Louise Woodward in the United States.
I am grateful to the House of Commons Library for the following figures. Although the official estimate is that about 20,000 to 30,000 school leavers take a gap year, in the current year 137,000 18-year-olds, 55,000 19-year-olds and 20,000 20-year-olds entered a university course. Clearly, a much larger group is entering university education later, perhaps having changed their minds after leaving school. They would benefit from guidelines about where they are going and with which organisation.

Mr. Roy Beggs: Most of the hon. Gentleman's remarks have focused on the gap year experience overseas. Does he agree that, before entering university or teacher training college, most students would benefit from a gap year even within the United Kingdom, and that steps should be taken to encourage that, because of the confidence that students gain from experience of the real world?

Mr. St. Aubyn: I am grateful to the hon. Gentleman. I have deliberately focused on the experience of school leavers going overseas, because it is with them that all the factors I have outlined come into play. School leavers doing voluntary work in this country will probably stay at home and do something in their own locality. However, I agree with the thrust of the hon. Gentleman's question.
The Government plan a programme involving millennium volunteers, and I believe that they hope for 100,000. Over the past six months, the Government have been asked many times—most recently in the House of Lords by Baroness Hooper—whether they will include overseas volunteers in the category of millennium volunteers. Millennium volunteers are contributing to their community, and overseas volunteers are contributing to the wider international community. I believe, as do the organisations involved, that overseas volunteers should also be allowed to wear the badge of the millennium volunteers, thus highlighting a very special opportunity for those involved.
I would not want to conclude without stressing the support that students receive for the gap year, not only from employers but from universities. I have here one of the many letters that I have received on the subject. The vice-chancellor of Loughborough university today wrote:
we regard gap year experiences as very valuable not least in taking forward students' key skills in terms of informal learning from work, travel etc. This fits in very well with the Dearing recommendations on key skill development for all HE students.
I represent a university town—it contains the university of Surrey—and I know that my vice-chancellor supports the idea of well-structured gap year experiences.
A year ago, the Department for Education and Employment was barely aware of gap year students. We know that, because of the hiatus caused for gap year students when the Government's plans for tuition fees were first announced. On that occasion, the Government performed a U-turn which might have done credit to a certain football team last night. They certainly performed a valuable service in recognising that there needed to be an exception for those students, but several thousands were still caught by the change in policy. I think that the Department is now much more aware of the nature of the gap year experience, the wide range of school leavers who take part, and of the importance of answering this call for them to be given guidelines.

Mr. Phil Willis: I thank the hon. Member for Guildford (Mr. St. Aubyn) for raising this topic. I apologise to the House for the state of my voice, but a great deal of cheering and shouting went on last night. Having then to go into the radio studios at 11.15 pm to do a late-night phone-in was not the best of experiences, but no doubt the Minister is familiar with that, having had to respond to the drubbing that Wales took in the southern hemisphere recently, on which the whole world commiserates with him.
The gap year experience is a very important subject. The one thing we learned from last summer's fiasco involving Government policy, or the lack of Government policy, on gap year students—the hon. Member for Guildford was generous in not spending too much time on it—is that there is a need to tighten the regulations, and to put the gap year on a much more secure footing.
I shall be brief, as I do not want to relive the nightmares of 1997; nor do I want to re-run in any detail the arguments about the introduction of tuition fees. At about midnight tonight, we shall have yet another vote, after a long debate on Scottish fees, and hon. Members will be

able to make their feelings known. However, the Minister must still expect to respond to last summer's fiasco concerning the gap year, particularly the way in which it was handled.
It is now a matter of record that the Secretary of State's statement on 25 July gave the clear impression that there would be no leeway for gap year students going off in 1997, and deferring their higher education places until 1998. The Government then performed a number of U-turns, which we welcome, as did the hon. Member for Guildford. However, it was clear from what the Government did that they did not understand the nature of the gap year, and were not familiar with the reasons why students took a gap year, or what an integral part it is of the higher education system.
On 14 August, Baroness Blackstone issued the famous press release which made the Government's position clear. However, it was not until about 24 September that universities were given hard information on what the Government's policy was. By that time, students who had not got offers of a place and had not taken up gap placements by 1 August were left out in the cold.
The Government failed to recognise that many students do not make their gap year arrangements as early or precisely as some would like, but wait until their A-level results come out. Only then do they make their decisions. It is important that they have that leeway, and can make their decisions as late as possible. The higher education system should be flexible enough to enable them to do so.
When they made their decision last year, the Government gave no hint to potential gap year students that there would be any change in the regulations. Students who expected to wait until their A-level results came out before making a decision had no indication that there was to be a change. The Government made a retrospective decision, which was applied arbitrarily to the 1997 student cohort. That was wrong. The way in which it was communicated to students was absolutely deplorable. At every stage, it was revealed in the press—through a leak to The Times on 11 August and a press release by Baroness Blackstone on 14 August. Individuals or institutions were obliged to monitor the press in order to find out what was happening in respect of Government policy. In his response to the debate, will the Minister assure us that future policy changes will not be announced only in press releases, but that the data will be sent to the relevant organisations and institutions involved, so that the information is available to everyone at the same time?
My purpose in making that point is to draw attention to the fact that many students who had not decided to take a gap year by 1 August have been disadvantaged. That is an inequity that could be redressed, even at this late stage, if the Government extended to students who took a gap year but had not applied by 1 August the same facilities as were available to those who had applied earlier.
Many hon. Members will have received correspondence from parents, and from individuals who decided to take a gap year, who feel disadvantaged by the fact that they will go to university this year on different terms and conditions from those affecting students who had applied by 1 August. I know that the Minister, who is an honourable and decent man, will accept that the deadline of 1 August was an arbitrary decision. I should like to think that, even at this late stage, the Government will acknowledge that it was an arbitrary decision, and change their mind.
We are concerned about the future of the gap year, and the hon. Member for Guildford made some extremely interesting and detailed points about its extent and nature. However, he did not refer to the statement by Baroness Blackstone on 14 August:
The Government recognises the numerous advantages that taking a year out can bring. The Government is particularly keen to encourage volunteering and we will be examining ways of how we can encourage it in the future.
I may have missed something, but yesterday I searched the web pages of the Department for Education and Employment, and found absolutely no reference to any Government plans regarding gap years. The Minister may be able to give us a detailed résumé of the Government's plans. We would certainly like to see the noble Baroness's words put into action.
No doubt others will extol the virtues of students working as volunteers or travelling. Many are obliged to take a gap year in order to earn the money to enable them to go to university, either to pay their tuition fees or to help defray the costs. I am sure that the Minister and hon. Members accept that most students who take a gap year will not be going off to East Timor or Borneo, but working on building sites or doing manual work to earn enough money to pay their way through university; and that is honourable, too. I do not believe that there are two categories of gap year—one that is good for a certain type of student and one that should be regarded as less worthy.
The Government should recognise all students who take a gap year, irrespective of whether they work as volunteers or to raise the money to pay their way through university. One small concession that they could make is to allow students who take a gap year to have their fees paid at the level at which they would have entered higher education in the first place. It would not cost a great deal, but it would represent the Government's recognition that a gap year is important for students.

Mr. St. Aubyn: Does the hon. Gentleman agree that it would be helpful if the Minister would mention the Government's plans for post-qualification entry, which will also affect the organisations involved, and explain how he proposes to involve the best of those organisations in his discussions on the introduction of post-qualification entry to universities?

Mr. Willis: I am grateful to the hon. Gentleman for that intervention, which relates to the answer that I am trying to get from the Government in respect of the noble Baroness's statement. She made a powerful statement, and the Secretary of State has made similar ones. It is only right that the Minister is given an opportunity this morning to explain to the House what plans the Government have, so we look forward to his reply to the debate.
Finally, I strongly support the point that the hon. Member for Guildford made about guidelines and registration of organisations offering facilities to gap year students or any students who are taking time out. There is no doubt that the Louise Woodward case has highlighted some of the problems faced by young people who go abroad without being properly prepared, and the fact that there is no proper regulation or the necessary support mechanisms to help them. A register and clear

Government guidelines would be welcomed by the organisations involved, but regulations certainly would not.

Mrs. Gorman: The hon. Gentleman has twice mentioned the Louise Woodward case. Surely that is a different issue, as she obtained employment through an employment agency, which is a different animal from the voluntary organisations to which my hon. Friend the Member for Guildford (Mr. St. Aubyn) referred.

Mr. Willis: I am grateful to the hon. Lady for her intervention, but I think that the two issues overlap. Many gap year students find work abroad or at home through employment agencies. More and more young people, particularly those travelling to the United States, Australia or the Pacific rim countries, are being encouraged to find work through employment agencies. Although I accept the hon. Lady's point that there is a difference between the two, it is important that the Government do not turn a blind eye, but seek the same guidelines for all relevant organisations, irrespective of whether they deal with undergraduates or others seeking work experience abroad.
I am grateful to the hon. Member for Guildford for initiating this morning's debate, and look forward to the Minister's response.

Mrs. Teresa Gorman: I have listened with great interest to my hon. Friend the Member for Guildford (Mr. St. Aubyn), and congratulate him on raising an important subject that obviously has ramifications outside the orthodox type of gap year. In my constituency, students have expressed the hope that they will be able to take a gap year, and employers have told me how much they value that experience for students.
We have been told that, whereas in the past increasing numbers of students have taken a gap year, this year there has been a fall in the numbers. I put it to the Minister that that is not unconnected with the fact that the Government have now decided to raise the cost of higher education for better-off students, who will have to pay their tuition fees, and for less well-off ones, who will face higher accommodation and maintenance costs. As a result, as the hon. Member for Harrogate and Knaresborough (Mr. Willis) pointed out, many more students will have to work in order to pay the expenses that the Government have increased for people in pursuit of higher education.
The Minister must accept that the Government's policies are having a detrimental effect on what we all agree has given a valuable dimension to many people's higher education experience. The majority of universities support the idea and go to great lengths to praise it, because the students who go to university after a gap year have more mature and focused views on why they are in higher education.
Many of us have had vast experience around the world as students and adults. We can all agree that there is no substitute for that contact with a variety of cultures and other people's way of life, as part of what would once have been called the university of life. That facility is undervalued. The Government's policies of increasing the cost of higher education are likely to deter many of our young people from gaining such experiences.

Mr. St. Aubyn: Does my hon. Friend agree that that highlights the Government's mistake in ignoring the


recommendation of the Dearing report not to abolish the maintenance grant? The fact that they flew in the face of that recommendation is at the heart of the problems we are discussing.

Mrs. Gorman: I agree with my hon. Friend. We are discussing a very important issue. The gap year is not a frivolous extra in the pattern of education that has evolved in this country, but an integral and very important way to help those entering higher education to broaden their knowledge and develop a sympathetic view of the life style of what we choose to call ordinary working people and those overseas who are so much less fortunate than people in this country.
We sometimes take for granted the tremendous advantages of being a British citizen and having the opportunities of higher education offered by the taxpayer, which the previous Government, like all Conservative Governments, sought to expand. The proportion of young people going into higher education has risen from, I think, one in eight to one in three. That is a massive increase. It is important that those young, and to some extent privileged, people go out into the world and learn how the other half lives.
I urge the Minister not to neglect the damage that his party is doing by making higher education more expensive. Those who decide when they leave school that they cannot afford to go to university may be lost to higher education for ever. They may go off into the world of work and find that the cost of severing that connection to go back into higher education is too great. We can take credit for the fact that so many mature students joined our universities under Conservative Governments. Such students have already achieved what might be called gap years by having worked. They now realise the value of education, and have gone back for it.
I left school at 16 and went for what would now be called a gap year, although I did a Louise Woodward and got a job abroad, which was quite poorly paid, but was a wonderful experience—and one that I would not have had if there had been a minimum wage and the employers had had to pay me more than they thought I was worth. That experience was worth a great deal more than money. We should emphasise that point.
The Minister should not just encourage such schemes, but should review again the Government's detrimental move that has made it more difficult and more expensive for people on lower incomes to take those opportunities. There is a fine balance for people coming from what we call a working-class background between choosing higher education and going into work, which they may never come out of to return to higher education. Pushing people in one direction—I think that it is the wrong direction—is one of the many downsides of the Government's policy.
I hope that the Minister will take that criticism on board. It is meant to be constructive, and is based on my experience. I am sure that many other hon. Members have a similar background. Many of those who have come up the hard way to sit on the Labour Benches would, if they were here—I understand that they are busy elsewhere—undoubtedly support the idea of not just keeping but extending the possibilities of the gap year, and making it financially possible.
For all the grandiose talk about the value of such schemes, we shall not achieve an increase in the university of life year unless we make it financially viable. I hope that the Minister will give us a constructive answer, not a lot of political propaganda trumpeting Labour's changes to education. He should admit that there are downsides to his policies, which he should ask the Secretary of State for Education and Employment to review carefully.

Mr. Damian Green: I congratulate my hon. Friend the Member for Guildford (Mr. St. Aubyn) on securing this debate on such an important and topical subject. He should be given credit for the work he did in his gap year, which he described as having taken place a few years ago. As he and I were contemporaries at university, I have inside knowledge on how few those years are. It is probably better for both of us if I draw a veil over the number.
My hon. Friend made a powerful case based on his experience. Being a social worker in Soweto in those days would have been radically different from any experience that he had had before or has had since. It will have been important for his personal growth, and for those for whom he did useful work. It certainly sounds more useful than my gap year, which I spent as a journalist. I am not sure that that improved my social and moral growth, and it may not have been as useful for the community.
I also thank the other two hon. Members who have spoken. The hon. Member for Harrogate and Knaresborough (Mr. Willis) gave a learned and thoughtful dissection of the chaos that fell on the Government when they made their tuition fees announcement last summer. My hon. Friend the Member for Billericay (Mrs. Gorman) made a characteristically pungent and thoughtful contribution on the wider benefits of the gap year.
It is regrettable that more hon. Members did not feel impelled to join the debate. The last time that I looked, the parliamentary Labour party had five ex-presidents of the National Union of Students, and their specialist knowledge might have been useful. I can assume only that, like much of the rest of the country, they are spending the morning sticking pins into wax models of David Beckham. That will be my last reference to that national disaster.
We all agree on the importance of this subject. The gap year is important for students. It needs to become more important, but it is in danger of becoming less important for a variety of reasons relating to the attitude of young people and the Government's policies on student funding. It is widely agreed across political divides that promoting lifelong learning is one of the most important steps forward we can take to educate our people and provide a more competitive economy. However, we might be about to take a step backwards on this issue, in which the interaction of real life and academic life has been encouraged for many years. It seems perverse—just when, as a society, we are encouraging people beyond the traditional student age to go into education—to discourage people of the traditional student age from gaining experience in the real world.
The Minister will be aware that several extremely good organisations have for many years been trying to promote gap year activities. Indeed, one, which is neatly called GAP—the Gap Activities Project, an educational charity—


has the Government's specific endorsement. Its most recent brochure contained a message from the Foreign Secretary, celebrating the project's 25th anniversary.
The best quotation in that brochure is from the chief executive of the Universities and Colleges Admissions Service, who makes the point that gap year activities benefit not only students and society as a whole but universities:
most universities and colleges are now very much in favour of a constructive gap year"—
one would emphasise "constructive"—
some are even beginning to insist on it. GAP volunteers take on social responsibilities and learn the hard way to manage their lives. This means they bring a more mature and broader approach to their studies.
That is clearly true, as I am sure the Minister would agree. GAP is just one of the relevant organisations. My hon. Friend the Member for Guildford mentioned others, and I shall say a word about Voluntary Service Overseas in a minute.
The points made by GAP were emphasised by one of its trustees, Baroness Hooper, who told another place earlier this year that the organisation currently sends 1,300 young people overseas, and that, on her recent visit to the Falkland Islands, she found eight GAP students working in various ways on farms or in local museums. The organisation also brings volunteers from overseas to this country.
Baroness Hooper asked the Government for assurances on three points; I hope that the Minister will be able to assure us on them in this debate. She said that the Government need to encourage broader educational experience and young people should play a more active part in citizenship. All of us must have such an important general aim; we must not let young people drift away from their wider responsibilities.
Baroness Hooper's second point, which I hope the Minister will address, concerned post-qualification applications to university. That fits the wider theme of lifelong learning, about which I am sure the Minister will want to talk. Baroness Hooper suggested that the Government should move to a system of post-qualification applications that
would provide those in the GAP organisation"—
and no doubt other organisations that promote such useful activity—
with a clear means of communication to the Department for Education and Employment in terms of being able to provide information from their experience and being able to explain clearly their needs."—[Official Report, House of Lords, 4 March 1998; Vol. 586, c. 1264.]
Baroness Hooper's third issue—my hon. Friend the Member for Guildford also raised it—concerns the millennium volunteers initiative, which has been widely welcomed. It would be impossible to say that all millennium-related activities are uncontroversial. I am sure that the Minister is grateful that the one with which he has most contact—the millennium volunteers programme—is one of the least controversial ideas on the subject that the Government and others have come up with. I congratulate him on that. Nevertheless, I echo my hon. Friend's words, and hope that the Minister will clarify the status of overseas volunteers in the programme. That would clearly give the programme some imprimatur, some badge of approval, which would help to raise its profile and status.
That brings me to VSO, with which, I suppose, most people would associate gap year activities. VSO springs to mind most readily; everyone has heard of it, and everyone has some image of it, which might be wrong. As it is one of the pioneering organisations in its field, the news to which my hon. Friend the Member for Guildford alluded is rather disturbing. VSO has 2,000 volunteers working in 59 developing countries. This year, for the first time, it has seen a fall in the number of its recruits. I am sure that the Minister will have read, as I have, comment inspired by that fall and the possible reasons for it.
The first suggested reason is that many 15 to 25-year-olds simply have not heard of VSO. That is a problem for the organisation. The 10 per cent. drop in the number of volunteers that it will send abroad, which is reflected by a 22 per cent. fall in applications and a 50 per cent. fall in applications for teaching posts, deserves wider consideration. VSO identifies as a potential problem the fact that the word "volunteering" puts people off. As one representative of another voluntary organisation said,
Volunteering doesn't have a cool image.
I am happy that, almost officially, the phrase "Cool Britannia" has been buried. It was always a terrible idea. By its very nature, something that is cool today is bound not to be cool tomorrow. Attempting to brand an entire country as cool was an extremely short-term and foolish idea. Behind the slightly flip phrase, however, lies a genuine problem. If it is not considered attractive to young people, the good work—concerning both the people involved and the projects—will suffer. This is one issue on which, for once, the Government's warm words would be useful. I hope that the Minister will consider that.
There appears to be a difference between the attitude of young people to volunteering overseas and to volunteering in this country. The number of volunteers who want to do community service in this country is still rising.
That gives the lie to the general point that has been made in much coverage of VSO's problems that we are entering a "me" generation, in which young people are much less altruistic. My experience is that that is simply untrue. I suspect that the level of altruism in young people does not shift very much from generation to generation. A certain number will be inclined to volunteer, and a certain number will not. The idea that the morality available in any cohort changes radically is slightly short-sighted.

Mrs. Gorman: My hon. Friend has raised an important point about altruism and participation in voluntary activity. Is not the Labour party's continual harping on the claim that unpaid or lowly paid work is invalid, and its insistence on minimum wages for people over the age of 19—an age at which we still expect people to volunteer—a factor in the changing attitude of young people? The issue is becoming political. Constant harping about slave wages and people being ground into the dust by wicked employers is undermining the spirit of altruism, which once encouraged young people voluntarily to give up their time.

Mr. Green: My hon. Friend tempts me on to the interesting subject of the interaction between voluntary work and the minimum wage, but, as time is short, I shall resist that temptation.
The central question that the Minister must answer is whether the Government are taking action to encourage young people to take gap years and widen their experience. Considering objectively the Government's actions over the past 15 or 16 months since they came into office, they are not improving the situation; they are making it worse.
The hon. Member for Harrogate and Knaresborough pointed out last year's funding arrangements fiasco. We have to put that in the wider context of the Government having rejected the Dearing committee recommendations on the preservation of the maintenance grant, which has had a series of deleterious effects on student funding—one of which we shall debate this evening, with, I suspect, rather more hon. Members present on both sides. I shall not use this debate to rehearse my arguments on that subject.
The gap year problem is simply one of a range of problems into which the Government have stumbled because of their proposals for funding arrangements. I am sure that they regard it as a relatively minor problem, but they have sent an important signal about how they regard the gap year.
The lack of maintenance grants will, for many students, mean larger debts when they leave university. Those of us who are involved in the minutiae of that subject have argued about it at great length, and will continue to do so, but the one fact that students thinking about their time at university have grasped about the new funding arrangements is that many of them will leave with large debts. The net effect is that fewer will consider taking a gap year, and more of those who want to do so will feel impelled to take a paying job rather than do any low-paid or unpaid voluntary activity.
Far fewer students are likely to take gap years after they have finished their main university course, because they will have a large debt and the bank manager will be breathing down their neck. Perhaps most importantly, they will have noted the Government's attitude when it was discovered that the introduction of tuition fees would cause a specific problem for gap year students. As the hon. Member for Harrogate and Knaresborough has pointed out, weeks passed before the Government dealt with the problem, because, although it was a serious and immediate problem for those involved, the Government clearly did not regard it as such. They simply had not thought about guidance for gap year students in that case, or at all.
That sent gap year students the clear message: "Forget about the warm words, and the Foreign Secretary making nice comments in brochures for organisations that promote gap years. Look at our deeds. The Government do not care all that much about gap year students and the activities they promote." I hope that the Government have learnt from that lesson, and that the fiasco will not be repeated. I hope that the Minister can reassure us that the Government have changed their deeds, and words, on gap years.
Moving on to what I should like to hear from the Minister, the first action the Government could take is to change their message and take practical action, or gap years will become unfashionable. I am indebted to

The Guardian—not a phrase one often hears at this Dispatch Box—for summing up many people's thoughts on gap years in an article last year. It said:
The convention wisdom is that it's best to do something `worthwhile', whether that's working in a shelter for homeless people or backpacking in the Punjab with nothing but a bottle of diarrhoea medicine and a Kula Shaker album for company.
That may well be the traditional, popular view of a gap year, but in this age, students who are thinking of taking a gap year will think that it is impractical, and will be put off. The first practical action the Government could take, for example, is to give us more information on the millennium volunteers.
Secondly, as my hon. Friend the Member for Guildford said, the Government could produce guidelines for gap courses that are available. I shall not ask for registration or detailed regulation—that would be inappropriate and wrong. However, the Government could issue guidelines so that students know that they are taking reliable, decent courses, and that they are not simply spending a year doing something life-enhancing while listening to Kula Shaker or anyone else. They would then know that they will benefit from their gap year activities, and so will other people.
Thirdly, the Government could collect some decent figures. My hon. Friend the Member for Guildford has pointed out that even the unparalleled resources of the House of Commons Library cannot find any accurate figures about the numbers of people taking gap year courses or what they are doing. I take it as read that, if the Library cannot find those figures, they do not exist. Clearly, policy would be better informed if there were decent figures. For example, do the Government have a target for numbers of students taking a gap year? If not, do they think that more students should take gap years? If so, what will they do about it?
The overall message is that the pressures on students are increasing, and it is possible that gap years will disappear altogether. That would be extremely damaging for the health of the education system, the personal growth of the students involved, and Britain's image around the world, where many gap year students have done much good over the past few decades. That would be a step back from the idea of lifelong learning, and I hope that the Minister will provide reassurance on all those points.

The Parliamentary Under-Secretary of State for Education and Employment (Dr. Kim Howells): I add my thanks to the hon. Member for Guildford (Mr. St. Aubyn) for bringing this important subject to the attention of the House, and for his thoughtful speech.
On statistics, the hon. Member for Ashford (Mr. Green) knows that I too am very concerned about how we collect statistics in this country. We are not very good at it; we spend a lot of money on it, but do not get very good value. We prepared some calculations for the debate, which show that currently just over 19,000 students have been offered a deferred place. The hon. Member for Guildford mentioned between 20,000 and 30,000 students, and I suspect that he is not far off the correct figure. They are students who said that they were interested in taking a gap year or a year off.

Mr. St. Aubyn: One has to distinguish between those who had a gap year lined up by the time they left school


and those who made a conscious decision to apply to university after they knew their A-level results. They are certainly in addition to the 19,000, and they are the several thousand students who, last year, sadly still suffered because of the way in which the Government dealt with the problem induced by their new rules on student funding.

Dr. Howells: I am sure that those statistics are not far wrong, and I would not argue with them. I hope that the hon. Gentleman appreciates my giving the figure of 19,000 so that he has a baseline from which to work, because I know that he is interested in pursuing the matter.
On volunteering, I was interested in what the hon. Member for Billericay (Mrs. Gorman) said—I am always interested in what she says, although she has lost her radical edge these days. I used to love listening to her old philosophical stance, but I fear that it has mellowed somewhat.

Mr. Willis: Sweet reason, but not on Europe.

Dr. Howells: Yes, sweet reason.
Volunteering is not exclusive to would-be students. I know many volunteers who are in their 50s, 60s and 70s. We are all sure of the virtues of volunteering, and know that we must encourage it in every way, but we must pay tribute to everyone who volunteers. It is not only the student cohort, but many other people who volunteer—indeed, society depends on volunteering in many different ways.
As the hon. Member for Ashford said, VSO has been of enormous importance to the image of this country. In addition, it has touched many families: my brother was a VSO volunteer in New Guinea, although he did not have a Kula Shaker album with him, and his anti-diarrhoea medicine did not do much good; after spending about four years abroad, he returned to this country with some awful bacterial disease.
As the hon. Member for Billericay says, guidelines and safety are key issues. The Government recognise the advantages to society and to individuals of young people undertaking enriching activities such as voluntary work, cultural exchanges, educational visits and work experience. We are keen to encourage volunteering by students, especially before they take up courses in higher education, if that is what they intend to do.
Our manifesto commitment to develop proposals for a national programme of citizen's service for young people is being fulfilled through the millennium volunteers programme. That programme's aim is to support young people between the ages of 16 and 25, and encourage them to make a sustained commitment to volunteering in a way that benefits the community; £15 million has been made available for the programme in this country. Decisions on the availability of future funding for millennium volunteers will be taken after this month's announcement of the outcome of the comprehensive spending review.
A consultation document was issued last October. We received 500 responses to the separate consultation exercises in England, Scotland, Wales and Northern Ireland. There was strong support for millennium volunteers, and widespread recognition of the fact that

volunteering helps young people to develop as responsible citizens. We have made the criteria for the programme as flexible as possible, without losing the requirement of a sustained personal commitment from the young person, which is the key to making millennium volunteers distinctive.
We recognise that the investment of time alone is not a measure of quality—that point lay at the heart of the speech of the hon. Member for Guildford. We have developed the idea, proposed in our consultation exercise, of a volunteer plan, which sets out the voluntary activity and the learning opportunities for the young person. I was glad that the hon. Gentleman emphasised the importance of having such a plan, and of knowing that quality training will be offered and that the experience will be of value; and that the young person will not be exploited to enrich the sponsoring organisation, or, in a more barefaced way, used as cheap labour.
National delivery of the programme will not be carried out by the Government; instead, a new organisation will be set up in England to deliver millennium volunteers. We are currently advertising in the national and voluntary press for the chairperson of that organisation. On 24 June, voluntary sector partners hosted a national conference to discuss the implementation of the programme in England, and to publish the document "Setting the Framework". Several demonstration projects in England are being set up over the next few weeks, and the Department intends to publish a millennium volunteers guide, which invites organisations to apply for funding, after the summer.
The consultation document expressed explicitly an expectation that activities undertaken by participants should
offer the prospect of value to the wider community".
We are not yet convinced that volunteering overseas can achieve that result on its own. We have to widen the consultation to take into account some of the arguments that have been advanced, not least by the hon. Member for Guildford today.

Mr. St. Aubyn: Will the Minister consider the suggestion that, if he is going to draw on 100,000 volunteers without endorsing the concept of overseas volunteering, he might draw into his programme those who would derive greater benefit from overseas projects and jeopardise the viability of some of the valuable projects that they would otherwise have undertaken?

Dr. Howells: I could not agree more, and I shall certainly take that important point into consideration. I am determined to ensure that we do not jeopardise organisations that plan properly and offer volunteers who go overseas real training, valuable experience and education.
We are fully aware of the valuable work done by volunteers working abroad. I agree entirely that voluntary work overseas offers young people opportunities for personal development. I can give the hon. Gentleman the undertaking that the Government are sympathetic to the idea of encouraging volunteering overseas, and that we are considering how that might be recognised within the millennium volunteers programme. My officials recently met key organisations involved in volunteering overseas, and agreed to consult them further. A final decision on


recognising volunteering overseas as part of the millennium volunteers initiative will be made when the consultation process is complete.
Voluntary work can be challenging for the individual concerned—that is part of the reward—but I accept that working overseas has its own particular challenges and difficulties. I have therefore listened carefully to the hon. Gentleman's comments about the activities of certain organisations, and I hope that, at some stage, he will see fit to name those organisations, either in the House or outside. I was shocked by some of the figures he quoted—everyone should be concerned about the examples he gave of eight staff arranging 800 placements a year, each costing £2,000, with inadequate guarantees about the conditions awaiting the volunteers; and of the 70 organisations offering gap year experience entirely unregulated.
The hon. Member for Ashford will be relieved to hear that we do not believe that the Government should act as big brother, and try to regulate every single activity. That would impose a straitjacket in an area in which organisations need to be flexible in providing volunteering opportunities. The way forward lies in a voluntary code of self-regulation for organisations involved in arranging gap year projects, but that has to be a genuine exercise in drawing up a code that has some teeth and that can be effective when organisations step out of line. I am conscious of the fact that, occasionally, gap year arrangements do not work smoothly, so organisations need to ensure that adequate controls are in place.
Most students who take a year off have a rewarding experience. As the hon. Member for Guildford made clear, Guildford and many other universities and institutions of higher education appreciate the beneficial effects of the gap year.
There is now a Central Bureau for Educational Visits and Exchanges, which receives a grant of £5 million. It facilitates gap year placements and produces an advice booklet that covers health and safety issues. I give an undertaking that the hon. Gentleman's suggestion that departmental guidelines should be issued will be given careful consideration, especially in relation to our deliberations on extending the millennium volunteers programme to overseas placements. I shall ask the appropriate officials from my Department to meet the main voluntary organisations to discuss the question of guidelines.
Therefore, I hope that the hon. Gentleman will accept that we have achieved some progress. I cannot give him a parallel or simile for last night's match, as he wanted. I am afraid that, as a rugby fan, I have not yet got over the 96:13 defeat of some of my constituents by South Africa. I hope that he will take that as an answer.

National Health Service (50th Anniversary)

Mr. Llew Smith: Some anniversaries, like birthdays, are best forgotten, but others cry out for recognition because of their relevance to present-day society. Fifty years on, the national health service is one such example. As a Labour Member of Parliament and one who has the privilege of representing a constituency that in many ways gave birth to that service, I believe that that legislation was the finest piece of socialist legislation this century and created the jewel in our crown. We should never forget that the service was created when we had just gone through another world war and this country was just about bankrupt.
There is a certain irony here in that, 50 years on, we are still not only debating what form the national health service should take but, in the rich country that we are today, whether we can afford the sort of service that my predecessor Nye Bevan envisaged. When he spoke on Second Reading of the National Health Service Bill on 30 April 1946, he outlined his vision of a health service, saying:
it will lift the shadow from millions of homes. It will keep very many people alive who might otherwise be dead. It will relieve suffering. It will produce higher standards for the medical profession. It will be a great contribution towards the wellbeing of the common people in Great Britain."—[official Report, 30 April 1946; Vol. 422, c. 63.]
As we were reminded, it was to be a national health service in which the rich and the poor were to be treated alike, where poverty was not a disadvantage and wealth not an advantage.
I was reminded of that many years ago when Professor Richard Titmus recalled a visit to a London hospital for the treatment of cancer. He was being treated at the same time and the same place by the same doctor for the very same reason as a young West Indian lad. Titmus observed that what determined who would be treated first each day had everything to do with the vagaries of London's traffic and nothing to do with the amount of money that they had in their pockets.
How different that philosophy and that of the early pioneers of the NHS is from what happened during those awful 18 years of Tory government. We all remember the then Prime Minister, now Baroness Thatcher, proclaiming to the world that the national health service
is safe in our hands",
when in reality she was transforming the service to one that someone described as geared to meet the young, the rich and the healthy, ignoring the poor, the old and the chronically sick.
Obviously, I am pleased that the Government are making considerable efforts to reverse that trend and rectify those wrongs. Additional investment in the service is one of the many ways in which they are doing so. However, Nye also recognised that good health did not depend merely on the health service. He was the first to draw comparisons and to state that, to have good health,


one also needed a good standard of living—therefore, if one wanted to tackle bad health, one had to tackle poverty. That was also recognised many years later with the publication of the Black report, which explained
inequality in health can only be understood in relation to poverty and poor working conditions.
That is still obvious in my constituency, the birthplace of the national health service, which unfortunately is either at or near the top of the league tables for heart and respiratory diseases, cancers, mental health problems, long-term sickness, disabilities and rates of infant mortality, standardised mortality and low birth weight babies. No one will be surprised, if one accepts the link between poverty and bad health, that my constituency is in one of the poorest local authority areas in Wales. We have the highest unemployment in Wales and some of the lowest income levels in the United Kingdom. We also have inadequate housing. If all those and many other factors are brought together, one gets the sort of deprivation that we experience every day.
Neither this debate nor the 50th anniversary celebrations should be an exercise in nostalgia. I suspect that Nye would treat such an exercise with disdain and that he would want us to learn from those 50 years how we can build on his achievements and those of others. Nye would also be honest enough to see the need to point out where successive Governments have been going and are going wrong in their attempts to tackle bad health.
Once again, I shall give an example from my local authority, which is one of the smallest and poorest in Wales. In the past three years, successive Governments with their cuts have made the local authority make resulting cuts of approximately £14 million. One cannot have such cuts in a poor local authority area without adversely affecting the service provided and the health and standard of living of people in the community.
Local authorities like mine also lose out in other ways. For example, many of our health clinics have poor resources and many of the valley constituencies, including mine, also lose out because they find it difficult to attract doctors to set up practices. In my constituency, that situation has been exacerbated by the actions of the local area health authority. For example, a doctor retired in Cwm, Ebbw Vale, which has serious health problems, as do other parts of the constituency. Instead of the health authority replacing that doctor with another, it decided to transfer his work load to another local general practitioner. Obviously, that was not good enough and did not respond effectively to the problems of our community. Much to their credit, the local people raised their voices in protest and, as a result, the health authority was forced to reverse its plans. It then promised us another full-time permanent doctor, but we are still awaiting the replacement a number of years later and we still have only a part-time, temporary doctor.
The Government are not only aware of the link between bad health and deprivation, but are trying to do something about it and, for me, the most important legislation during this Parliament must be the introduction of a minimum wage. However, the effectiveness of such a wage in combating poverty will obviously depend on the level at which it is set. I accept the arguments put forward by many individuals and trade unions, including those representing health service workers, that, if the wage is to be effective, it should be set at £4.60 per hour.
My next question concerns the possible privatisation of the health service. Successive Governments have proposed or enacted legislation to privatise different public services. Indeed, they seemed to want to copy the United States of America, for example, and how it runs such services.
Many years ago, I read a book on health care in the United States, which mentioned that the chair of Kentucky Fried Chicken had decided to resign his position to head the new Hospital Corporation of America because, as he said:
The growth potential in hospitals is unlimited. It's even better than Kentucky Fried Chicken.
I do not know how many hon. Members have tasted Kentucky Fried Chicken but, if they have, they will be justifiably concerned that the quality of the product will be what we could expect if the health service is privatised. To allow such an organisation to be involved in the health service would be as nonsensical as to allow McDonald's, for example, to be involved in the organisation of education zones.
I know that the usual response to those who warn about the privatisation of the health service is to say that it will never happen, but the reality is different—one has only to think of the private finance initiative, for example. It is good to see the Secretary of State for Wales here today. He was sponsored for many years by the National Union of Public Employees, and then by Unison, as it became. Unison described the PFI as creeping privatisation, and I agree with that sentiment. It referred to Labour's announcement of major acute hospital PFI schemes, and reminded us that
PFI in the NHS is not simply about bricks and mortar. It is about the ownership and control of NHS assets, services and staff… Private consortia will finance, build, own and run new hospitals or services and lease them back to the NHS… PFI is also beginning to dominate other forms of investment and service delivery in the NHS. For example, the lack of public investor finance for sterile supplies or NHS catering facilities is resulting in PFI being used extensively in this area also.
Responsibility for running services is being handed to the private sector in return for private finance. That, as Unison argues, is creeping privatisation, which will, in the long term, be very expensive for the NHS.
If Government spokespersons are not willing to accept the opinions of so great a union as Unison, I am sure that they will want seriously to consider the words of my right hon. Friend the Secretary of State for Social Security, whom we all respect. In 1996, as a shadow health spokesperson, she said to a Unison conference:
When the private sector is building, owning, managing and running a hospital, it has indeed been privatised.
I agree with what she said then, just as I agree with Unison now.
If Nye had wanted a health service to be provided by private companies, he would not have created the national health service. He inherited a patchwork of voluntary, local authority and private hospitals, from which he created a national health service free at the point of use—a service for people, not for profit. If he had wanted a national health insurance system, he would have created one. Nye believed that it was vital that the NHS should be provided by the public sector—the PFI undermines that vision.
As we celebrate the 50th anniversary of the foundation of the NHS, the Welsh Office has published a consultative document proposing a trust to cover the whole of Gwent.


I believe that that will damage the service in the northern part of Gwent. I want Gwent to have two trusts, but that is not my opinion alone—it is also the opinion of the Blaenau Gwent borough council, Monmouthshire county council, the community councils in the area, the Nevill Hall trust, the community health councils in north Gwent, many voluntary organisations and thousands of people who have signed a petition.
If the Minister is unwilling to listen to those bodies, perhaps he will listen to the 166 general practitioners who have gone public in their opposition to the Welsh Office's one-trust proposal. When I raised the issue some months back, only 50 GPs opposed the proposal; now, 166 GPs oppose it, and that number is increasing every day. Those people should not be ignored. I know that the Welsh Office will say that Gwent health authority supports the scheme, but, in fact, the health authority expressed only a marginal preference for that option. All the main players—for want of better description—have come out in opposition to the Welsh Office proposal.
I am aware that one of the reasons why the Under-Secretary of State for Wales, my hon. Friend the Member for Bridgend (Mr. Griffiths), opposes the two-trust option for Gwent is that he does not want to break up local authority areas. However, in giving trust status to Cynon Valley and Merthyr as part of the North Glamorgan trust, he accepted the need to break up the Rhondda Cynon Taff local authority area. We in my constituency do not object to that proposal—indeed, we applaud the Minister's wisdom—but we argue that he should apply the same reasoning to our community. He may argue that Cynon Valley and Merthyr already had their own trust, but that does not detract from the fact that he is willing to break up local authority areas.
It is proposed that there will be 15 trusts in Wales to serve 2.9 million people—each trust will, on average, serve just under 200,000 people. However, a single trust for Gwent would cover some 550,000 people, although even that is a considerable underestimate, as it does not take into account the catchment areas in Powys and, indeed, parts of Herefordshire.
On 30 March, my hon. Friend the Member for Bridgend perceptively conceded that the trust, if approved, would be very large. In the consultation document, he said:
With a project turnover of £240 million in 1999–2000 and fixed assets of £180 million, the trust would be one of the largest in the UK.
He could also have said that it would employ a massive bureaucracy of 10,000 people and that it would probably cover an area of some 300 square miles. He seemed to be of the opinion that, for Gwent, big is beautiful. However, for some reason, he decided to reject that philosophy for his constituency. Indeed, the trust that he has set up to cover his constituency and the two neighbouring constituencies will serve a population of only 270,000. I wonder why that is. If we accept the logic of the view that big is beautiful—that trusts to serve 550,000 people are acceptable—Swansea should be added to the trust that will cover those three constituencies, as such a trust would be similar in size to the one that is proposed for Gwent. We in my area and in the area of my hon. Friend the Member for Monmouth (Mr. Edwards) do not argue that the trust serving Bridgend, Port Talbot and Neath should be merged with the one serving Swansea. All we are saying is that that is the logic of the Minister's position.
We want a trust in north Gwent that can concentrate on the health problems that I have outlined. We do not want a single trust covering the whole of Gwent, under which we would be lost, as we have been lost in the past. The present health funding formula does not take into account the number of people who need long-term care, so areas such as Blaenau Gwent are discriminated against because of their poverty and serious health problems. That is hardly a socialist principle, but it is the reality.
To deal with the winter bed crisis, north Gwent received only 22.5p per patient, whereas the south of the county received £3.47. A year or two ago, it was decided that the provisions for mental health in Gwent should be reorganised. The person appointed to carry that out admitted at a public meeting that he knew nothing about the area. He did not bother to consult the patients, their families and friends, nurses, doctors, local authorities, community councils, trade unions, Members of Parliament or the community health council. That is how we in Gwent have been treated, and we do not want history to repeat itself.
The Minister says that there will be a phased replacement of existing technology and information systems. How long will that take and what will it cost? He says that the existing management responsibilities will be retained until April 1999 and that key responsibilities will be identified as soon as possible. Tell that to a demoralised staff, who are facing yet another major upheaval.
The Minister tells us that locally delivered services will continue to be provided in north Gwent, but he does not say whether they will be the existing services or whether they will be enhanced or reduced. Of course local services will be provided locally: they would not be local services otherwise. What guarantee do my constituents have that they will not have to travel 30 miles to a hospital for treatment or to visit friends or family?
I warn my colleagues in other parts of Gwent that, if high-quality clinical and surgical services are transferred to south Gwent, day-to-day routine operations could be transferred to the north. That would not only affect morale and recruitment in the north but would mean that patients and visitors from Newport would have to travel to Abergavenny.
There are no real health arguments for the one-trust option, and even the possible savings seem to have been watered down. The Government's penny-pinching attitude does them no credit in a country that is now so rich and that was so desperately poor when the national health service was created 50 years ago.
We are told that this is a consultation exercise. We hope that it is; if it is, the Minister will find out that virtually all the community is opposed to the proposals. If it is consultation, and not merely another public relations stunt, the Minister will have the courage to alter the proposals from one trust for Gwent to two. If he fails to do that, we shall all know that it was consultation in name only, and our communities will lose out once again.
We hope that the legacy of the Government will not be one of damaging the national health service that Nye and others had the imagination and courage to create. Future generations would not forgive us for that. Let us build on the positive aspects of the Government's work in the national health service and ensure that, this time at least, justice is done for the people in our communities.

Sir Geoffrey Johnson Smith: It is a pleasure to follow the hon. Member for Blaenau Gwent (Mr. Smith), who represents a constituency that, as he said, was once represented by the right hon. Gentleman who is associated with the founding of the national health service, the 50th anniversary of which we are celebrating.
Let me say en passant that I understand the philosophy behind the primary care groups, but we do not contemplate anything in my part of England that would be as large as the hon. Gentleman suggested for his part of Wales. The group that has been proposed for my health authority would involve 50-odd general practitioners and cover a population of 80,000.
I know a little about the medical profession, and I find that GPs have their own way of doing things: they and other members of the medical profession rightly have an independence of attitude towards the way in which they carry out their duties and ply their skills. There are those in rural practices who have developed particular attitudes to fit the needs of their patients, and if we amalgamate all those people with their different priorities, combining urban and rural areas, I fancy that it will not always be easy to find the harmony that one would expect among professional people carrying out their duties on behalf of the public.
I do not want to go into great detail, because I want to cover a wider canvas on the question of the national health service, but I want to fire a warning shot across the Minister's bows—I welcome his presence, because I know that he takes a keen and practical interest in these matters—to show that I hope to get an assurance, at some future date, that my worst fears are not well founded.
It is an honour to speak in this debate and to pay tribute to the national health service and to all those who work or have worked in it, giving of their time, skill and dedication—bywords among many of us who have had the opportunity to meet at their work those who have given such excellent service to the public.
I was almost in at the birth of the national health service, as I am one of the few Members of Parliament who was alive and well at the time of its introduction. Little did I know that, some years later, I would represent the constituency now represented by the Secretary of State for Health—Holborn and St. Pancras, South, as it then was—which contains some of the finest teaching hospitals in the world. I got to know members of the medical profession, nursing staff and administrators extremely well. I pay a warm tribute to them, as they carry on the best traditions of medicine to be found anywhere on the globe.
I also compliment those who give service in my health authority area—they are dedicated, as one would expect, and try to observe the highest standards, although it is not always easy for them so to do—and especially those who give of their time and money to help out the smaller hospitals.
We are fortunate enough to have two community hospitals. It took two deputations to persuade the previous Government not to close the community hospital at Crowborough, which, like so many in the 19th century, was founded by voluntary contributions. Today, it is still charged with raising £2 million—it has raised £1 million—to ensure, with help from the health authority, that it can be modernised and fulfil the

important function of allowing elderly people and women with babies not to have to travel to the district general hospital in a congested town far away. I pay an especially warm tribute to the voluntary side, which has spent so much time trying to raise money, with some success, although there is still a long way to go.
I also congratulate the previous Government, whom I have heard rubbished on more than one occasion, including at yesterday's Question Time. It is now part of the ritual to say, "No, we spent more than you did," "No, you didn't, you spent less," "You destroyed what we tried to build up," and so on. All new Governments say such things. The previous Government did the same after the cuts in the health service imposed by the previous Labour Government during the stormy economic days of 1976 to 1979.
I wish to goodness that we could get rid of some of the ridiculous party politics. One reason why the national health service is failing us—not in terms of health, but in terms of its structure—is that the concept of it leads to too much low-grade politicking. I try to avoid that, but I do not think that it was pointed out yesterday that, overall, we increased expenditure on the health service by 3 per cent. in real terms. Of course, the amount varied from one year to another; we would have liked a smoother financial passage.
When the last Conservative Government came to office in 1979, expenditure on the NHS in England, as opposed to the United Kingdom as a whole, was some £9 billion. When we left office, it was well over £35 billion—and that was not small beer. We spent more, standards improved, and so it went on. I do not think that that record should be rubbished.
Nor should our record be rubbished in respect of the birth of the national health service. It is true that Conservative Members of Parliament opposed it, but so did doctors. It should not be assumed that a politician who opposes the NHS does not care for the people, any more than doctors who opposed it should be accused of not caring for the people. What they did not like was state control over health matters, which they saw as socialism.
Even Lord Beveridge, the architect of the modern welfare state, was not keen on the creation of a national health service. He had certain things to say about it. They may sound rather old-fashioned now, but I think that they are worth repeating. He said:
It is a logical corollary to the receipt of high benefits in disability that the individual should recognise the duty to be well and to co-operate in all steps which may lead to diagnosis of disease in early stages when it can be prevented. Disease and accidents must be paid for in any case… One of the reasons why it is preferable to pay for disease and accidents openly and directly in the form of insurance benefits, rather than indirectly, is that this emphasises the cost and should give a stimulus to prevention.
That is, perhaps, a rather Victorian concept.
Beveridge went on to say:
British people are clearly ready and able to pay contributions for institutional treatment. Should a payment for this purpose be included in the compulsory insurance contribution and be passed on as a grant from the Social Insurance Fund to the health departments towards the maintenance of the institutions?
He referred to
the importance of securing that suitable hospital treatment is available for every citizen and that recourse to it, at the earliest moment when it becomes desirable, is not delayed by any financial considerations. From this point of view, previous contribution"—


through the insurance system, I assume—
is…better even than the free service supported by the tax-payer. People will take what they have already paid for without delay when they need it, and they pay for it more directly as contributors than as tax-payers.
It is possible that, because it is free at the point of demand, the NHS has weakened that link—weakened the citizen's feeling that he should take responsibility for his own health, and his awareness of the connection between his treatment and the cost to the nation, as well as to his family. That point is ripe for debate, because it cuts right across the concept of the service being free at the point of demand. I am merely quoting the views of someone who was not cruel or hard-hearted, and who recognised the importance of health treatment to the poorer members of the community, but who thought that there was another way—perhaps a more responsible way—of ensuring that there was a link between the insurance taken out by a citizen and the service that he received as a consequence.
The hon. Member for Blaenau Gwent spoke of Aneurin Bevan's dedication to the health service. Bevan, however, realised that he was opening the floodgates. He referred to the cascade of medicine that would flow down the throats of the British people. Even at that time, he was aware of the mounting costs of the health service. Although he did not want to, Bevan—and the House of Commons—had to accept that prescription charges would have to be introduced. Then came the question of paying for spectacles, and so on.
Bevan was clearly disappointed, because he resigned, but he understood what had happened. He is on record as saying that costs were increasing at an alarming rate—more than he had ever imagined.

Mr. Llew Smith: If the right hon. Gentleman reads Nye Bevan's resignation speech, he will see that Bevan resigned not just over prescription charges, but over such issues as defence spending. He thought that one area of spending was causing problems to another. It is interesting to read that speech.

Sir Geoffrey Johnson Smith: I am sure it is, but I do not think it can be denied that Bevan realised that the floodgates had been opened to heavy expenditure that he had not envisaged. I lived through it, and I know that, at the time, many people said that the health of the nation would improve and that costs would therefore fall. How wrong they were. I cannot criticise them, because that was the received wisdom at the time; but they did not realise that the health service was not the only vehicle for improving the health of the nation. Health can be improved by a better standard of living—by a better diet, better housing and better education. The health of the nation does not improve markedly more than that of any other nation because we have a national health service.
Although I admire what has been done and what is still being done, I think that we must face up to the reality of the NHS and what it has achieved. We should not just look back; we need to look forward, and ask ourselves how we can provide a better and more affordable health service. The present system is not good enough, for many reasons. It can be improved.
Since 1948, most countries have looked at their own health services. Germany, for instance, has continued with a system that was introduced years ago by Bismarck.

Its system of compulsory insurance for health treatment must have influenced Beveridge; otherwise, he would not have made the comments that I quoted. New Zealand, Canada and Holland have looked at their health services in recent years, and have introduced reforms on the principle to which most of us adhere: that the door should not be closed to people who happen to be poor. Such people should not be deprived of decent medical care.
Interestingly, not one country that has examined our system has adopted it. That should make us, on this 50th anniversary, take stock of the present situation, and ask ourselves what we can do to improve our service in the face of rising costs—costs that I cannot see declining, for several reasons.
First, the health service is labour intensive. As the Minister knows, a fair proportion of low-paid people work for the NHS. One reason why they put up with low pay is their feeling that they are doing something for others: that voluntary spirit is very strong in the health service. Those workers are better paid than many others, but, given the range of skills that they possess, and the salaries that such skills would command in other walks of life, they are not overpaid, by a long chalk. If we want to improve recruitment and reduce the notorious wastage in the NHS—especially among nurses—we must consider that point.
Secondly, there is the problem of the aging population, but I shall not dwell on that. Then there are the sensational advances in medical care and diagnostic technology. We all know how expensive that technology is. Someone was telling me the other day—I do not know whether it is true—that a little drip feed that could once be bought for very little now costs £140. Why is it so expensive? It is computerised, so doctors do not need to attend to it. They know what is going into the patient, and whether the mixture is right. That is a great advance, but it is expensive.
Expectations are always rising. I will never forget being absolutely astonished to meet a woman who I thought had gone into hospital, but who was back and walking after her hip operation. It is not uncommon to meet people who have had two hip operations. Expectations are rising because people know that a wide range of surgical techniques hitherto undreamt of—and certainly unthought of by the medical profession at the foundation of the health service—are now available, and might improve the quality of their lives.
Dr. Chris Adams, a consultant to the department of neurosurgery at the Radcliffe infirmary, Oxford, is not regarded as a wild, radical doctor who runs ahead of the pack. In the November edition of Parliamentary Review, whose editorial judgment would, one assumes, lead it to employ only those whom it believes to be reasonably rational, Dr. Adams said:
Financing medical care is a world problem.
However, we need not feel guilty about that,
Because each year advances make medicine more expensive—and that trend will accelerate. This country cannot afford a comprehensive free health service, and it is not providing one.
He went on to say, as others do, that we should not put up with the present system of rationing. It is, of course, not always called "rationing", but there are long waiting lists for certain treatments for which there is great demand. If one believes that the health service should be free at the point of demand, one might argue that that is immoral.
I do not want to generate party political heat, so I recognise that the Government do not accept that gloomy prognosis. The White Paper takes a different view, saying that, at its best, the NHS is the envy of the world. I do not use the word "envy"; I have seen too often how other countries employ the best techniques. I do not envy them that; they are pretty good, and we are pretty good, too, and have institutions and practices that are as good as any. However, as the hon. Member for Blaenau Gwent said, we are a rich country, so that might be expected.
The White Paper also says that the Government reject arguments that the NHS cannot cope with the pressure of public expenditure without a huge increase in taxation or charges for services or radical restriction in patient care. It states:
The health service is a strong and resilient organisation.
It also says that the NHS has met past challenges and will rise to future ones. It is not my purpose to say dogmatically that the Government are wrong, but hon. Members may have gathered that I have my doubts. They are not irrational doubts, and they are not motivated by emotion, but I have practical doubts about whether the Government's worthy aims can be met.
Funding the NHS by taxation always involves the menacing figure of the Chancellor. Chancellors are not cold-blooded men; even the present one has decent feelings, just as his predecessors did. However, Chancellors have a duty to the nation. They must consider defence, and there may be arguments about why defence should have more money. The hon. Member for Blaenau Gwent mentioned that Nye Bevan was concerned not only about the increasing costs of the health service and charges, but about the cost of defence. Chancellors are always concerned about rising costs. There are always battles between one Department and another.
Perhaps that is one reason why we are more politically conscious of the health service than virtually every country that I have visited. The politics of health in the United Kingdom stem largely from the fact that so much decision making lies here because we—rather, Chancellors—control the purse. The Chancellor has more control over decisions balancing how much should go to defence or other parts of public expenditure than any other Minister. Although the economy does not have to go from boom to bust, we all know that no economy can sail along year after year in the assumption that things will get better and better. There may be a world economic crisis from which we cannot be insulated, especially now that there is a global economy. That would have a profound effect on the Government's ability to deliver from taxation all the services that they want. That is one reason why people think it would be a good idea if the Government were to consider additional ways to finance health.
The Government should not underestimate the serious defects of the NHS. First, there is the money problem. In a few days, the Government will announce an extra injection of money, and I have read that it will be a greater real-terms per annum increase than has been accomplished before. I do not know if that is so, but there will be a substantial increase. All will look good for three years, but the Government cannot guarantee that there will not be some change in the economy that will leave the Chancellor having to tell a Secretary of State for Health that the belt has to be tightened. One of the service's problems is that it is wholly dependent on money from taxation.
There is an acute shortage of personnel—a particularly serious problem among nurses, doctors and specialists. One reason why there is a waiting list is that there are appallingly few consultants. According to 1994 figures, not very out of date, and still true, we have 9.5 consultants per 10,000 of the population. Sweden has 20 consultants, Germany 19, France 14, Finland 15 and the Czech Republic 20. We are not quite as badly off for general practitioners, but France has 14 per 10,000 of the population, while Great Britain has six. Germany has 11, and I could list other countries. The simple message is that the people on whom we rely for skilled advice and knowledge are in short supply. The NHS executive has also mentioned that we are short of modern equipment. We simply do not have enough of it. I visited the United States recently, and found that magnetic resonance imaging was everywhere. Here, we have made a start, but there is much to do.
I should like the Minister to pay attention to training—a difficult problem. The training of our medical profession is too unstructured and is inefficient. What happened at Bristol would not have happened if training and qualifications had been more specific. Junior doctors spend hours walking round wards looking after patients, but those hours are out of all proportion to the time when they should be provided with specific teaching. Our emphasis on teaching is not high enough. Of course, more teaching will not come cheap.
It is difficult to understand why the Government refuse to consider topping up revenues for the NHS, as happens in the European Union. Stephen Pollard, a former director of the Fabian Society, has said:
Continental Socialists find little time for the politics of narrow-minded statism which has in recent decades characterised the British Labour movement's approach to healthcare. In countries such as France, Spain, Belgium and Greece, they really accept the complementary benefits that can be derived from actively involving their independent healthcare sectors and putting them to good use.
The socialist Government in France have no problem about topping up their taxpayers' contribution in that way. Other international comparisons also show the use of additional sums from, for example, non-profit mutual societies—an old Labour concept�žand friendly societies. I cannot think why we do not make better use of them. For those reasons, the time has come for us, and especially the Government, to examine the matter and perhaps to go back to some of their old Labour roots to find how much we can better use our resources to ensure that the NHS is better funded and well funded.

Mr. Deputy Speaker (Mr. Michael Lord): Order. Before I call the next speaker, I remind the House that this is a brief debate. Many hon. Members wish to speak. If they are brief, many will get in; but if they are not, many will be disappointed.

Mr. Paul Flynn: I congratulate my hon. Friend the Member for Blaenau Gwent (Mr. Smith) on securing his sixth Adjournment debate in this Parliament. He almost holds the record, but two Members have had seven. I have several points which, unfortunately, cannot be made in a couple of minutes. I want to draw attention to what I believe are the NHS's major weaknesses.
Like the right hon. Member for Wealden (Sir G. Johnson Smith), I remember the start of the health service. As a 13-year-old schoolboy at a May day rally in Sophia gardens in Cardiff, I heard Aneurin Bevan speak about the NHS. I remember it more vividly than, say, the events of yesterday evening, which is probably just as well. He used as a measure of the success of the health service something that strikes us as astonishing today—the increase in the birth rate. He pointed out that he was not claiming any personal responsibility for the increase. How extraordinarily things have changed. He would have been surprised that we rate the NHS by the crude measures of waiting lists and the amount of money spent.
I am sometimes critical of the Government, but we are doing splendid work on the NHS. I congratulate Ministers on tackling the major weaknesses. People will look back in 50 years and say that this was a turning point in the reform of the health service. I refer to the Government challenging the omnipotence of clinicians, which led in part to the terrible Bristol tragedies. So much of medicine is based on mythology, on the first thing that comes into a doctor's head, not on science or evidence. A series of individuals make thousands of decisions in their domains. Hip operations—on which I had a debate many years ago—are an example on which research and evidence exist.
The main weakness of the health service is not private medicine but the commercialisation of all medicine, with so much being done not for the needs of the patients or to advance medical science but to serve the interests of commercial companies. It was true even five years ago that anyone having treatment for cancer would have had as good treatment in the health service as they would have had privately. That is no longer true. It is now a gamble. People's treatment depends on where they live and whether drug companies are conducting trials in the area. The drug companies are leading research into cancer treatment. The whole business is a sad gamble with people's lives, because it is commercially driven.
Enormous damage is done by the vast over-use of medicinal drugs. It is a great tragedy and lives are being lost. We make a great fuss about illegal drugs, but the figures for Wales over the past four years show that six people died from heroin and only 13 from all illegal drugs, while 108 died from paracetamol, 28 from co-proxamol and 55 from methadone, which is a legal drug. In the UK, 2,500 people die annually from the misuse of medicinal drugs.
To see zombies with damaged lives who exist in a perpetual trance, one should go not to some slum to find kids with needles sticking out of them but to the residential homes. There, people are drugged unnecessarily with neuroleptic drugs. There have been two major reports in Britain on the subject. One was in a northern town, but I cannot say where because the report has not been published. It discovered that 54 per cent. of residents of such homes who were on neuroleptic drugs did not need them; 20 per cent. of admissions to hospital for elderly people resulted from misuse of medicinal drugs. That involved not only neuroleptic drugs but the interactions between all drugs. An identical figure was found at Gloucester royal hospital: 20 per cent. of elderly admissions were for misuse of such drugs. A Glasgow

study showed that the figure was 88 per cent. These terrible, powerful drugs mimic the symptoms of dementia and Alzheimer's disease.
Many people have stories of relatives entering homes frail but with alert minds. Within weeks, they are put on regular prescribed medication. It becomes routine and they are turned into zombies with a poor quality of life. The study that I mentioned visited hospitals with a pharmacist and a doctor and examined all the medication that the elderly took. They were able to reduce it by at least half. Each individual was taking an average of six drugs. Some had been taking them for years and did not realise why. It had all been forgotten. The interactions between drugs were doing great harm. Neuroleptic drug use was cut enormously. The result was a better quality of life. People returned to being sensible and taking an interest in what was happening around them and they lived longer.
That is going on now in this country. We must address it. I hope that there will be support for a Bill that will come up during the slaughter of the innocents this Friday when 60-odd Bills come before Parliament. I hope that no Conservative King Herod will kill them all. We must address the problem. The Bill chimes in with what the Government are doing by saying that we need transparency. The Government have a battery of measures to ensure that we can know what is happening. When we find a residential home where 100 per cent. of residents are on neuroleptic drugs, that cannot possibly be right. The savings which can be made by dealing with this issue can be applied to other areas of care in the homes which greatly benefit people.
Drugs are misused in many other parts of the health service. We know about antibiotics, with the creation of methicillin-resistant staphylococcus aureus. The philosophy of medicine is vast over-use of drugs because of the commercial interests and bodies that press, influence and lobby us and the health service to oversell drugs. We have become a society that does not want to accept the human condition. If we are sadder today than yesterday, we feel that we need a pill to take. For every discomfort, grief or pain, we think that there is an answer. Common sense tells us that someone suffering from a bereavement must suffer, weep and wail. We cannot smother it with drug-created euphoria, because the grief will recur in a more damaging form.
People going to hospital will routinely be told that they have to take daily pain-killers when they are not in pain, just in case, or anti-depressants when they feel happy. Huge amounts of drugs are then given to counteract the effects of other drugs. When the House meets in 50 years, our time will be seen as a period when people were obsessed and our lives full of drug use. That is the main heresy of our time.
The answer to many of our problems is not to be found in superficial measures. People are far better on a waiting list than having their babies attended at Bristol royal infirmary or having a dodgy hip replacement. We must examine the quality of the health service. That is the measure that will improve things. We must escape from the present situation, where so much of the health service is driven not by the needs of patients but by the greedy needs of commerce to make extra profits.

Mr. Simon Hughes: I am conscious that we have far too little time, so I shall be brief. I thank the hon. Member for Blaenau Gwent (Mr. Smith) for giving us the opportunity to say thank you to the national health service. On behalf of my Liberal Democrat colleagues, I pay tribute to that 50 years of history. We stake our claim to the genesis of the NHS. After the Webbs in the 1920s, Beveridge in the 1930s and 1940s—he was briefly a Liberal Member of Parliament and then a peer—wrote the report that said that a precondition of a welfare state was a national health service that dealt with all conditions. For those who have not read it yet, I recommend the book by Nick Timmins as a very good and timely read about the history of the welfare state in those great days.
Nye Bevan did the country proud and the Labour Government did the country right after the war. The rest of us have a duty to build on the basis of that. We could all eulogise the good things that the health service has done in all four countries of the United Kingdom, this great capital city and our constituencies. I add my words of thanks to those who work and have worked for the health service, not only at the sharp end—consultants doing difficult and acute operations every day, experts in paediatrics and intensive care—but people such as health visitors going out and about and those who work for environmental health improvement. As the right hon. Member for Wealden (Sir G. Johnson Smith) said, for every curative health service, we need a preventive health service to match. The two work hand in hand.
Like others, like the House as a whole and, thank goodness, like almost everyone in Parliament, we are committed to retaining in this country a health service free at the point of delivery. I have seen the recent figures. We spend £45 billion a year on the health service. Last year, 30 million people used it. That means that for every person who used it, it cost £1,500. For all of us, who might need it any day, it costs less than £1,000 a year. We pay 6.5p in the pound in tax for the NHS. It is very good value for money.
The debate, which I welcome, is about what the health service should do in the years to come. My colleagues and I believe that we have to connect—in Forster's words, "only connect"—the funders and the job. We have to agree as far as possible what the NHS should do, what is the core service, what is the provision. The Minister of State, Department of Health, the hon. Member for Darlington (Mr. Milburn), was honest enough yesterday to admit to the House that in some parts of the country services are available while in other parts they are not. He said that we should have parity of service. I share that view. The public want to be engaged. I read in the newspapers today that a survey by the Institute of Health Services Management for the conference down the road reveals that one of the things that matters most to people is what the health service does, and that they want much more involvement in the debate about what it does. I hope that, in future, the debate about the boundaries of the NHS will become a public, orderly and regular debate and one in which we can all take part. If things cannot be agreed nationally, our local councils and health authorities—we believe that they should be together—should be able to decide to add on services and to raise the money locally to do so.
I welcome the fact that the Government are soon to announce significant amounts of money for the health service. All the indications are good. I will not be churlish. I shall analyse the figures carefully and see how much the real increase is in percentage terms. I shall criticise it if it is not enough, but the recognition that we need a lot more money to catch up and then consistent increased growth to sustain the health service is welcome. The Minister knows the priorities. A health service cannot be run without staff. The right hon. Member for Wealden has made the point that we are desperately short of staff. We have to find incentives to people to train and stay with the health service.
We need capital to provide the buildings. I share the scepticism of the hon. Member for Blaenau Gwent about the private finance initiative, as do my colleagues. We need an information technology base to ensure that we make efficient use of our resources. I share the view of the hon. Member for Newport, West (Mr. Flynn) that far too many drugs are given to people, and that we depend on drugs far too much. If we can massively reduce the drugs bill and improve health in a drug-free way, we shall be doing the country a good service.
My pager—as well as warnings through the press—tells me that the Secretary of State has announced to the conference in Earls Court the Commission for Health Improvement. In our manifesto—the health section of which I drafted last year—we said that there should be an inspectorate of health and social care. I welcome the commission, on which I gather there will be consultation. I put it to the Minister that there should be—the consultation paper appears in the Minister's hands as if by magic—regular inspection similar to Office for Standards in Education inspections of schools. Any patient or health service professional should be able to telephone the commission and ask it to go in and inspect a GP, hospital or clinic if he does not think that they are doing the job properly. The stronger the commission is, the better. That is where we get a quality health service.
In the 50 years to come, the NHS will be coming home. In the next couple of years we shall, in effect, have four national health services in the four countries of the United Kingdom—one in Wales, one in Northern Ireland, one in Scotland and one in England. I welcome that. The respective services may take on a different style, but it will be no less a national health service. I hope that it will be the people's health service and not the professionals' health service, and that people will have a greater say.
The Secretary of State said yesterday that waiting lists were the supertanker that was turning round. We shall debate that later, but for today we need to say that the NHS is the flagship of the public service fleet. The higher the flag flies, the more contented and healthy the people are. We salute it and wish it a successful voyage in all the 50 years ahead.

Ms Julie Morgan: I am pleased to speak in this historic debate on the national health service. I congratulate my hon. Friend the Member for Blaenau Gwent (Mr. Smith) on securing a debate this week on the anniversary of the NHS. I represent a Cardiff seat but, like my hon. Friend, I come from the south Wales valleys. I am proud of the fact that the NHS was born in Wales. I strongly support the principle behind it—that it should be free at the point of delivery—which has been covered in many of the speeches today.
I want to focus briefly on some of the key issues that face the NHS today, all of which have arisen in my constituency. I represent a constituency in which there is an excessive number of hospitals. We have three major hospitals in Cardiff, North—Velindre, which is the major cancer hospital in Wales, the University Hospital of Wales, a major teaching hospital, and Whitchurch hospital, a psychiatric hospital. The nature of the first two hospitals means that many of the issues that are brought to me are of an acute nature, involving people who are very sick, their families, or their doctors. They are about treatment for very sick people. The Government's emphasis on public health, preventive care and the links with bad housing, poverty and the minimum wage—all those issues that have been raised today—is of tremendous importance, but we have to deal with, and debate in public, the provision of acute services. Some of those issues have been aired today.
Although some of the problems of the purchaser-provider split are being tackled, we probably still have to take further steps to reintegrate the NHS, especially in relation to acute services. Can the NHS operate properly with a split between commissioners and providers of very acute services when it is dealing with the advances in medical science that have been mentioned this morning? With advances in drug therapy for cancer, for example, is it reasonable to think that decisions about new drugs can be dealt with at a local commissioner-provider level? Will the health care commissioners have sufficient knowledge to decide which drugs to buy?
There has been much publicity lately about the improvement in cancer care in the United Kingdom, but also about how much it lags behind that in other countries. The figures are sometimes dramatic. Survival rates for different cancers vary enormously throughout the world. The publicity around cancer care raises public expectations. I believe that it is right that they are raised and that people should know about advances and treatments that might be available. However, that presents a dilemma about how to deal with that knowledge and deliver the service.
One problem, especially in relation to cancer treatment, is that much of the research is in the hands of the pharmaceutical companies, as my hon. Friend the Member for Newport, West (Mr. Flynn) said. It is a big issue—and a big debate, which we must have. We have to decide who is to have treatment and what treatment should be made available.
The other big issue that has come up in my constituency is acute heart surgery. The proposed heart transplant unit in Wales has been on then off, on then off, for the past three years. Before the Welsh Office and the University Hospital of Wales Healthcare NHS trust commit to it, the views of all the health areas in south Wales have to be taken.
In 1996, the right hon. Member for Wokingham (Mr. Redwood) changed the health authority boundaries and removed the central planning capacity of the NHS in Wales to take strategic decisions about the provision of services such as the heart transplant unit for Wales and the ability to top-slice health authorities. That meant that the planning mechanism for those acute services had gone. There have been about three years of discussion and

waiting to see whether the heart transplant unit will be provided in Wales. Wales should have such a unit. There is much discussion about the rebranding of Wales, and a top heart transplant unit is one of the greatest services that could be provided: heart transplantation is becoming common and should be available locally.
In September, the paediatric heart surgeon at the University Hospital of Wales in my constituency, who has had tremendous success in treating children with severe heart problems and has built up the unit, is to return to Italy. He has an empty theatre in which to operate, but he does not have the nurses and the paediatric intensive care beds to do the amount of surgery that he wants to do. It is frustrating not to have the ability to develop that work at the hospital. At the same time as that surgeon is leaving for Italy, the cardiologist is leaving to go to Bristol. Bristol's gain is Wales's loss. The chair of cardiology in that same teaching hospital remains vacant while a decision is awaited on whether there will be transplant surgery in Wales. Everybody is waiting for everybody else, and the result is the loss of a first-class service in Wales. I appeal to the UHW and the Welsh Office to ensure that we can continue as before with paediatric cardiac work in Wales.
The same is true of other advanced treatments. The UHW has the capacity to develop advanced in vitro fertilisation treatments, but consultants have to visit health authorities to see whether people will buy their product. There must be a simpler way. The purchaser-provider split is not effective in such acute, expensive areas of medicine, but it is important to make them available.
There must be a debate on how to fund and decide health service priorities. Advanced developments must be examined strategically. The health service may face huge challenges, but this week we must celebrate 50 years of the NHS. I am proud that it was born in Wales. Health provision must continue to be free at the point of delivery, but we must find a way to make available to people the tremendous advances in health care.

Mr. Elfyn Llwyd: I congratulate the hon. Member for Blaenau Gwent (Mr. Smith) on securing time to debate the important issue of the 50th anniversary of the NHS. The service is under great pressure, especially in Wales, and I hope that the Welsh assembly will formulate a policy to serve the needs of Wales. There are many reasons for differences in Wales, where there are more heart complaints and more premature deaths, and where a host of other problems are endemic. Those problems need to be addressed, and I hope that the assembly will do just that.
I have been brief, because I know that other hon. Members wish to contribute to the debate. I have jettisoned most of my speech but I am pleased, none the less, to take part in the debate.

Mr. Philip Hammond: We welcome the debate and I congratulate the hon. Member for Blaenau Gwent (Mr. Smith) on securing it. I join other hon. Members in paying tribute to those who have built the health service over the past 50 years and who continue to give dedicated service. The service's 50th anniversary is the time to celebrate past


achievements, to take stock of the present and to look forward to the future. The hon. Member for Blaenau Gwent ranged fairly widely in an attack on Government policy. He spoke about the minimum wage, the private finance initiative and education zones. We sympathise with what he said about the situation in Wales and I assure him that the Opposition will listen to what the people of Wales have to say over the next few months. Other hon. Members struck a more consensual tone. I was delighted to listen to my right hon. Friend the Member for Wealden (Sir G. Johnson Smith) and to the hon. Members for Newport, West (Mr. Flynn), for Southwark, North and Bermondsey (Mr. Hughes) and for Cardiff, North (Ms Morgan).
The national health service is a truly national institution. It enjoys universal public appeal and no party or faction can claim ownership of it. The Beveridge report was commissioned by the wartime coalition Government, and in the 1945 general election both main parties were committed to the introduction of a universal health service that was available to all. It fell to a Labour Government to introduce the NHS in 1948, and Labour is rightly proud of that achievement. We in the Conservative party had control of the NHS for 35 of the past 50 years and we are proud of our stewardship of the service.
The NHS has prospered and grown under Conservative Governments. In the period between 1979 and 1997, NHS spending grew by 3.1 per cent. in real terms on average. Treatments went up by 3 million and the number of nurses, doctors, dentists and midwives increased. Capital spending increased by 50 per cent. in real terms in that time. I hope that we shall not hear from Labour Members the old, tired mythology that the NHS is somehow a product of the Labour party and that only it holds the NHS dear.
There is broad, cross-party consensus on the objectives for the modern NHS. They are to provide cost-effective, state-of-the-art health care that is free at the point of delivery and based on clinical need. There is political debate on the NHS but it is not about the objectives of the service: it is about differences in view on how best to achieve those objectives. There is an urgent need for debate on innovative and imaginative ways of ensuring the provision of the extra resources that the NHS will need to flourish and prosper in future. As medical technology develops and demography changes, the demand for more resources will increase. New technologies will allow better prediction of genetic predisposition to diseases, and that will allow preventive medicine to be better targeted. That will lead to long-term savings but it will demand greater short-term investment.
It is important to begin that innovative debate about the means of ensuring the availability of resources that the service will need in future. If the debate is to be meaningful, it is important to determine the underlying core principles that are important to patients—the users of the service—and to distinguish them from the sacred cows. The principle of universal availability on the basis of clinical need, free at the point of delivery, should be inviolable. Beyond that, the resourcing of the service should be based not on political dogma but on the determination to deliver the best possible service to users within the constraints of prudent fiscal policy.
Hon. Members on both sides of the House are proud to join in the celebration of the 50th anniversary of the NHS. The best birthday present that we, as politicians, can give

the NHS is to break out of the sterile debates of the past and launch a real debate on future resourcing of the service so that it can effectively deliver a modern national health service offering the level of service that the British people are entitled to expect in the new millennium. We need a debate that acknowledges the consensus on objectives that exists across the political divide, the commitment among hon. Members on both sides of the House to the future of the NHS and the real issues of escalating demand and finite tax-based resources; recognises the reality of rationing that exists now in the system; and does not shrink from hard questions in seeking to ensure the proper resourcing of our health service.

The Minister of State, Department of Health (Mr. Alan Milburn): I am delighted to have the opportunity to respond to the debate, which has been initiated by my hon. Friend the Member for Blaenau Gwent (Mr. Smith). He has secured it at an appropriate time not just for his constituents, but for the whole nation. It is particularly appropriate that it should fall to my hon. Friend to open the debate on the 50th anniversary of the NHS as one of his predecessors, Aneurin Bevan, was the founding father of our NHS. I think all hon. Members would want to pay tribute to Nye Bevan for his work, in the 1940s and subsequently, in giving the nation the sort of NHS that we have now.
This has largely not been a party political occasion, but I must point out that the hon. Member for Runnymede and Weybridge (Mr. Hammond) seemed to be suffering from a slight case of selective amnesia. In 1946, when we debated this issue in the House, his party opposed the National Health Service Bill tooth and nail. It fought it throughout—on Second Reading, Third Reading, Report and subsequently.

Mr. Nicholas Soames: I am sorry that I was not here for the whole debate. Will the Minister acknowledge that the doctors opposed the establishment of the NHS, too? It is not a matter of pride for anyone that they should have opposed the creation of the NHS. The fact is that it is a truly wonderful service. All parties in the House should acknowledge that, and try to minimise, not maximise, the amount of politics involved.

Mr. Milburn: As the hon. Gentleman knows, I am all for keeping politics out of this place. I remind him that 90 per cent. of doctors voted in favour of the NHS in their ballot. There are interesting parallels with the situation today because, at their conference last week, 85 to 90 per cent. of general practitioners voted in favour of this Government's policy on NHS modernisation.
The NHS was founded on a simple principle: the best health services should be available to all—quality and equality. That appealed to the fair-minded people of our country then and it still appeals to them now. No one dares challenge those principles. No one says that the best health services should not be available to all. Indeed, the NHS embodies the principles in which the Government and my party believe.
We achieve more together than we do alone, and we have a duty to look after the weak as well as the strong. The NHS not only binds the nation's wounds, but binds


the nation together. Each and every family in the land has a stake in the NHS and in its future. This Government were elected on the principle that the best health services should be available to all on the basis of need—not according to ability to pay or, indeed, who one's GP happens to be.
My right hon. Friend the Secretary of State recently had the honour to meet one of the first patients to be treated in the NHS, a lady called Sylvia Diggory, who summed it up far more eloquently than perhaps any hon. Member—including me—has been able to do in this debate. She said:
Britain is one of the few countries where they feel your pulse before they feel your wallet if you collapse in the street".
That is a lasting testimony to the sort of national health service that Nye Bevan wanted to create.
It is a privilege to be a Minister with responsibility for health in the 50th year of the health service. As hon. Members will know, this Sunday, we celebrate the 50th anniversary of the founding of the NHS. My hon. Friend the Member for Blaenau Gwent reminded the House that, during the passage of the Bill, Nye Bevan talked of how the new NHS would lift the shadow from millions of homes. He was right. It is now impossible to imagine life in Britain without the NHS. Its achievements in those 50 years have been immense.
The NHS has banished the fear of being ill and becoming ill for millions of our fellow citizens. It is our country's greatest institution and it is my party's proudest achievement in government. It is living proof that public services can be both efficient and popular. Quite simply, the NHS has delivered the goods, as Nye Bevan promised it would.
I pay tribute in particular to all the people who work in the health service and who have given so much day in, day out over the past 50 years in the service of others. Without them, the achievements of the NHS simply would not happen.
Some people said in 1946, 1947 and 1948, and some people still say, that we cannot afford the best—that the principles of the NHS are not practicable, that they cannot be delivered. The past 50 years have proved those prophets of doom and gloom wrong because our NHS has served this country well for the vast majority of the time. The vast majority of patients over the vast majority of the country have received top-quality treatment and care, and the NHS has proved to be the cheapest and most cost-effective health care system in the developed world.
That is not despite the principles on which the NHS was based; it is because of those principles. Fairness and cost-effectiveness have gone together. They are two sides of the same coin. The basic financial principle of the NHS is that it is paid for out of taxation and free to people when they use it. That is a fine principle and, contrary to what the right hon. Member for Wealden (Sir G. Johnson Smith) said, it is also phenomenally efficient because it avoids the horrendous costs of paperwork that are inevitable in any system where patients have to pay for treatment.
That is the main reason why our system is so cost-effective. It puts a bigger proportion of resources into patient care, and a lower proportion into paperwork,

than any other system. That is true even now, when we still suffer from the after-effects of the competitive internal market. It is one of the reasons why the Government are sweeping away the internal market, but it is not the only reason. The internal market introduced a new competitive ethos into the NHS that was anathema to the basic principles of the NHS. It was also deeply inefficient.
Our NHS is based on the basic common-sense idea that we achieve more together in partnership than if we compete. It is that idea of partnership and co-operation—helping each other out—that is at the heart of the NHS. Indeed, it is one of the reasons why my right hon. Friend the Secretary of State for Wales has proposed a series of trust mergers to cover the Principality.
I know that my hon. Friend the Member for Blaenau Gwent has concerns about those issues. My right hon. Friend has been here to listen to those concerns. He has listened to them in the past. My understanding is that what is taking place is a genuine consultation, where the views that my hon. Friend and his constituents have expressed will be taken into account when final decisions are taken.

Mr. Huw Edwards: On the issue of the trust merger in Gwent, may I assure my hon. Friend that all the Government's priorities and policies will be fulfilled if we have a separate trust for north Gwent?

Mr. Milburn: I am sure that my right hon. Friend the Secretary of State for Wales was listening to that intervention, and that those considerations will be taken into account when final decisions are taken.
As hon. Members have said, this is a great time for looking back and celebrating what we have achieved, but it is important also that we look forward and that, in particular, we look to build the sort of modern and dependable health service that people want. That is what the Government are committed to doing. That is why we are intent on cutting waiting lists, and are now achieving that. That is why we are intent on enshrining quality at the heart of the NHS; my right hon. Friend the Secretary of State for Health has launched a consultation on how we better ensure quality and transparency for all patients in the NHS. That is why we want a much more integrated form of care than was ever possible under the internal market. We want to break down barriers between services—between health care, social care and housing care—so that patients receive the benefit of all those services. The patient should be at the heart of the national health service.
We also realise, as my hon. Friend the Member for Blaenau Gwent asked us to do, that—if we are to improve the health of the nation, and, more important, if we are to improve the health of the poorest at a faster rate than the health of the overall population—we will have to tackle the root causes of ill health, which means tackling poverty, creating jobs, building homes and greening the environment.
The Government have embarked on the biggest anti-poverty, pro-health crusade that the United Kingdom has seen in two decades. To underpin that crusade, we shall annually invest more in the national health service, as we promised to do. We have embarked on the biggest new hospital building programme that the national health service has ever seen.
On the private finance initiative, I remind my hon. Friend the Member for Blaenau Gwent that the Government were elected—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order.

Pedlars

Dr. Peter Brand: I am grateful for the opportunity of raising the issue of pedlars. I have been supported on the issue in an early-day motion that has been signed by hon. Members on both sides of the House. We have also tabled questions on the issue to the Under-Secretary of State for the Home Department, the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth). I am grateful that he will respond to this debate.
There are significant problems associated with people who trade on the streets, whether they are pedlars or street traders. I should like to concentrate particularly on the issue of pedlars. I believe that they create unfair competition, are poorly controlled, cause great problems for local police forces and are certainly a major headache for environmental health, trading standards and local government licensing officers.
I am sure that pedlars once served an extremely useful function in spreading goods round rural communities, such as my own. However, they used to work on foot within a local district, and the fact that they were licensed by a local police authority was entirely appropriate if they restricted their activity to within that authority. Unfortunately, now any pedlar can get a licence from his or her own local police force and operate anywhere within England and Wales. Although I am sure that the Pedlars Act 1871 was entirely relevant to its time, I am not quite sure whether it is entirely appropriate now, especially as we move towards the millennium.
I have received considerable representations on the issue. I am particularly grateful to my colleague, Alan Hersey, a local councillor on the Isle of Wight, who first brought it to my attention. Concern about the matter has been very strongly expressed by carnival committees, bonfire societies and other organisers of voluntary events.

Mr. David Heath: My hon. Friend mentioned carnival committees. He may be aware that we have a thriving carnival tradition in Somerset. Many of the carnival committees and other clubs in my constituency are concerned that the effect of the 1871 Act has been to divert funds from collections at carnivals and from charitable purposes to private hands. Those organisations look forward to a revision of the law that will deal with the situation.

Dr. Brand: I am grateful for that intervention, and shall touch on that issue as I develop my speech. My hon. Friend also provided a demonstration of the fact that the matter is one not purely for the Isle of Wight—although we probably have more carnival committees per head of population than anywhere else in the country.
Pedlars are a particular problem for areas that are dependent on seasonal trade. Established traders, who have to be in such areas the year round, are undercut and damaged severely by—dare one say it—fly-by-night pedlars dropping in, creaming off the profits and then disappearing again.
It might be helpful if I reminded the House of a few facts. Pedlars are supposed to trade only on foot, although they are allowed to push barrows. They are not supposed to be in the same place for more than an hour, but are


supposed to move a bit each time that they make a sale. One can readily realise the impossibility of policing such regulations. I know that many local authority officers have spent many hours video-taping suspect traders in the hope of securing a prosecution, which is extremely hard to bring.
Pedlars are known only to their own local police authority. There is no obligation on their part to inform police in the place where they are operating. Although they have to show a pedlar's licence when apprehended, they are allowed to carry on the trade for which they have been licensed if they are on the public roads—which presents the problem for charity organisers who hold events on public land. It is not unusual for pedlars to move from one such event to the next, creaming off the take that really should be going to the societies organising the event.
Not only is it important for carnival committees or bonfire societies themselves to receive an income from the events that they organise—if they do not, they cannot continue operating, and it has been very difficult for some organisations to continue operating—but, when they are in surplus, they are big contributors to local charities. We should encourage such practices as a part of the great diversity and richness of the British tradition.
Pedlars pay only £12.50 annually for a licence. Street traders usually have to pay up to 100 times that amount to be licensed by a local authority. Again, it shows that there is an unfair competition.
Street traders, whose goods can be checked by local authorities, are often undercut by pedlars working in the same area. In my constituency, many street traders provide valuable employment by selling well-made, locally produced goods. Pedlars coming in undercut those street traders, very often with shoddy goods that are very difficult to return as the pedlars move off immediately once one discovers that a new watch has fallen to bits or that those new bright lights no longer shine.
Street traders are strictly controlled. Before they are given a licence, nuisance to local tenants and competition with other shops and cafes are carefully considered, and noise and smell nuisance are taken into account by local authorities, which find it extremely difficult to exercise the same types of control over the peddling fraternity.
There is some evidence that, because their goods are not controlled, pedlars can do harm to the general public. There have been cases of goods, especially toys, being sold that would not have been approved by local trading standards officers. However, in such cases—especially if there is no organisation sending pedlars out—it is extremely difficult to attribute blame if something happens. The idea of caveat emptor is a wonderful one. However, when in the middle of a charity event a child wants a specific teddy, it is very difficult to say no. Moreover, nowadays people expect goods on sale to be of a marketable quality. I am afraid that, because of the loophole in current legislation, we are failing in meeting such expectations.
As I said, it is difficult for police to take action if pedlars are not breaking a criminal law. It is also extraordinarily difficult and time consuming to have to establish that pedlars have not moved the appropriate number of times. Such exercises are extremely expensive for local authorities.
I should like to return very briefly to the harm that peddling does to charitable organisations. It is important that we continue to support and enable community organisations—which very much are community-based organisations—to continue with activities such as providing carnival floats and organising local bonfires, fetes and other village green activities. It is not unreasonable to allow organisers of such events to recoup some of their expense, by licensing agreements with the local authority, to pay for the associated costs of the carnival, fireworks or bonfire. Many societies are on the brink of failure because their finances are being severely damaged by people coming from far away whose only purpose is to cream off some money and then disappear. These people make no contribution to the local community, unlike local shopkeepers, local street traders and, of course, the organisers of charitable events.
It is not in order for me to ask for a change to the legislation. I know that the Home Office has had the issue of pedlars and their licensing under review since 1994, so I hope that it is in order for me to ask the Minister when that review will be published and what the Government's plans are to deal with an extraordinarily anomalous situation.

The Parliamentary Under-Secretary of State for the Home Department (Mr. George Howarth): I am grateful to the hon. Member for Isle of Wight (Dr. Brand) for initiating this debate. This is not a subject that often gets an airing in the House, but I know from my correspondence with him, to which he referred, that it is one which in some areas gives rise to considerable concern.
Pedlars have long been a feature of life in this country, but many people are unclear about precisely what the term means today. To some it is an anachronism with little relevance to modern life. A quick glance at the Pedlars Act 1871—and, indeed, the subsequent legislation of 1881—supports the view that the hon. Gentleman expressed. For example, references to "caster of metals", "mender of chairs" and a person who "travels and trades" without any horse or other beast "bearing or drawing burden" certainly prompt questions about the continued relevance of the legislation.
However, there is no doubt that peddling continues to be a distinctive method of trading, even though the nature of the business may have changed. For example, certain door-to-door salesmen are classified as pedlars, although that by no means covers the wide range of people who conduct their business by calling at people's homes.
It is the type of pedlar who plies his trade in busy streets in the centres of towns and cities who is of particular concern to the hon. Gentleman and to the hon. Member for Somerton and Frome (Mr. Heath). As the hon. Member for Isle of Wight says, in law pedlars are not street traders and are subject to different regulations. Councils can designate streets for street trading, and street traders must obtain from the local authority a licence, or at least a consent, to trade in those streets, usually from a specific pitch. They must also pay the requisite fees and charges and observe various conditions.
On the other hand, a pedlar obtains a certificate from the police for only a modest fee. This allows the pedlar to conduct his or her trade anywhere in the


United Kingdom. The hon. Gentleman referred to some of the difficulties to which that might give rise in that the certificate is issued in one area but can apply in other areas. I understand the hon. Gentleman's point very well.
The essential point is that pedlars are expected to move from place to place. Court judgments in recent years have tended to confirm this. The effect of those judgments is that a pedlar must keep on the move, apart from when conducting a sale. This gives a useful pointer to the type of trader we are talking about. We have all seen people wandering the streets with, typically, foil balloons, T-shirts or similar items for sale. Those traders are clearly pedlars.
The hon. Gentleman described the problems which he says are being caused by pedlars in his area. If he did not go so far as to say that the law favours pedlars, he suggested that it needed some adjustment and should be changed accordingly. I shall return to that issue shortly.
Perhaps I should comment on the rationale behind the present arrangements. Street trading is a more regulated and costly business than peddling because it is a more substantial operation. A street trader can establish a fixed pitch, which will inevitably involve the local authority in cleaning and other costs that we can fairly readily imagine.

Dr. Brand: In practice, it is often extremely difficult to spot the difference between a pedlar and a trader, other than the fact that the pedlar has to move on. Traders and pedlars leave the same amount of litter, but street traders are rather more responsible because they know that they risk losing their pitch.

Mr. Howarth: That is precisely the point that I was making. A street trader may leave a mess but the process is properly regulated. The difference is that he has the opportunity to sell a wide range of goods and to build up a regular turnover, customer recognition and, in some cases, customer loyalty. I say that, not in defence of pedlars, but merely to draw attention to the fact that there is a crucial distinction.
A pedlar who is genuinely operating as a pedlar has no fixed spot. He must keep on the move, which means that there are fewer associated costs. It also means that he is limited to selling only those goods he can carry. Pedlars are therefore offering a rather different service from that offered by street traders. That is reflected in the "lighter touch" regulation that they enjoy.
I understand how frustrating it must be for established traders to face competition from what are in effect opportunistic operators. It is clearly wrong that licensed street traders, who have responsibilities and expenses, lose business to fly-by-night, unlicensed competitors. It is not entirely clear how far the problems we have heard about today are caused, or exacerbated, by unlicensed street traders as opposed to genuine pedlars.
The fact is that anyone who simply sets up a pitch, or conducts business from a stationary position, in a designated street, is likely to be engaging in unlicensed trading. This attracts a maximum penalty of a £1,000 fine. This would be the case even if the person concerned produced a pedlar's certificate. The courts have made this clear. The question is whether a pedlar remained on one spot for any length of time, so effectively inviting customers to come to him. If so, he would be street trading without the necessary authority.
Unauthorised traders can pose significant problems, particularly in town centres at busy times. I accept that, as the hon. Gentleman said, they can cause a real headache for local authorities in terms of enforcing the law, which can become a difficult and burdensome process. In some cases, there could be problems in establishing the point at which a pedlar—with or without a certificate—is actually engaged in unlicensed street trading. The fact remains, however, that in these circumstances remedies are available. Anyone who acts as a pedlar without a valid certificate is also liable to prosecution. In addition, he may be causing an obstruction under the Highways Act 1980.
There have been suggestions that the sentences available to the courts are inadequate. The hon. Gentleman referred to that implicitly, if not explicitly.

Dr. Brand: I am grateful to the Minister for trying to read my mind, but that is not the case. The problem is in securing a conviction. It is extremely difficult to get the evidence on which to convict. I hear what the Minister says, but as his speech progresses I hope that he will comment on whether it is still appropriate for someone who is supposed to trade on foot to travel in a car, or by coach or lorry, from the area in which he has been given his licence and then to walk but use the vehicle as a base.

Mr. Howarth: That is an interesting point and I shall reflect on it. I do not want to give a precipitate answer that would not necessarily be helpful to the hon. Gentleman, so I shall write to him and attempt to provide some sensible guidance as to how an authority should operate in those circumstances.

Mr. David Heath: I am most grateful to the Minister. Will he also touch on the competition with charitable collections, particularly in the context of carnivals, which by definition move around? The current position is perverse, as the Charities Act 1992 makes it more difficult to obtain a licence to collect money for charitable purposes than to obtain a pedlar's licence and extract money from the same crowd under what I consider to be a false pretext.

Mr. Howarth: I am grateful to the hon. Gentleman, who raised that point in an earlier intervention. I shall comment on it later in my speech.
Our general policy on sentencing levels is to ensure that they are proportionate to the degree of mischief caused. Before we make any decision to increase the penalties available, we need to look carefully at a number of factors, including the sentencing practice of magistrates within the existing scale. The information available suggests that the sentences imposed for street trading and peddling offences generally fall well short of the maximum. There must therefore be real doubts as to whether increasing the level of fine, for example, would make any appreciable difference. As the hon. Member for Isle of Wight said, there may be other ways of facilitating prosecution and I promise to look into that.
It is sometimes said that pedlar's certificates are used as a cover for unlicensed street trading. I know that some pedlars attempt to exploit the certificate in that way, but the number of pedlar's certificates issued—around 2,000 a year—appears to be declining. On the other hand,


reports of unlicensed street trading are on the increase. It is a persistent problem in many areas. It is arguable whether the presence of pedlars makes matters a great deal worse. Many of those involved in unlicensed street trading are not pedlars and, what is more, make no claim to be so. I know from my own experience on Merseyside where there is a particular problem. I have had direct experience of it in the centre of Liverpool so I do not want to underplay it.
I understand why street traders and other businesses may feel that even genuine pedlars present unfair competition. After all, they are exempt from street trading controls and, as the hon. Gentleman rightly pointed out, their costs are lower. However, a bona fide pedlar has to be able to carry his wares. Given the more limited range of goods that he can sell, I am not sure how far he can be said to damage the business of street traders. It could be argued that the competition offered by pedlars is no more unfair than that between street traders and small shops—it is a matter of different considerations—or between small shops and out-of-town stores. Pedlars often quickly move on. Many people will therefore choose to buy goods from more established traders whom they will inevitably regard as more reliable.

Dr. Brand: I am sorry to ask your indulgence again, but there is a significant difference between the various groups that you have mentioned and pedlars.

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I remind the hon. Gentleman that he should be using the third person.

Dr. Brand: Does the Minister agree that there is a substantial difference in that the list of activities that he mentioned are all either licensed by or governed by planning controls and are subject to the local authority and the anomaly is that there is absolutely no local control over pedlars?

Mr. Howarth: Of course, but planning controls invariably relate either to pitches in the case of street traders or fixed location properties and it would be difficult to apply them to somebody who, by definition, must keep moving. Of course I accept that additional controls apply to other traders.
As the hon. Gentleman has made clear, in the Isle of Wight there are particular worries about the practice and the standard of goods on offer. Unscrupulous operators are clearly a menace and the licensing of street traders and certification of pedlars is designed to reduce that risk. Consumer protection legislation applies just as much to goods bought from street traders or pedlars as to those purchased from other outlets. I recognise, of course, that

such traders—particularly pedlars—may be rather more difficult to track down. However, a customer can, and should, ask to see a pedlar's certificate before buying from someone on that basis. Most people are fairly cautious about what they are prepared to hand over money for in the street, although particularly in places such as the Isle of Wight, and perhaps Somerset, many people are on holiday so their defences may be somewhat lowered.
The hon. Members for Isle of Wight and for Somerton and Frome mentioned charitable collections. I share their concern about the abuse of the pedlar's certificate for fraudulent charity collections. Where individuals collect money or sell goods on behalf of a named charity, the promoters are required to obtain a licence from the local authority. Part III of the Charities Act 1992, which has yet to be implemented, will simplify and strengthen the existing controls. However, the issues involved are indeed complex and the Government are considering when and how the measure might be implemented.
I accept that a pedlar's certificate may make life easier for those determined to mislead the public. Unfortunately, carnivals—to which both hon. Gentlemen referred—or similar large-scale events, will always attract such characters. I shall give further thought to the real and serious points that both hon. Gentlemen have raised and if there is anything that we can usefully do, I shall notify the House in a suitable manner.
As the hon. Member for Isle of Wight said, in 1994 the previous Government began reviews of pedlars and street trading legislation. I should make it clear that they did so in the context of their deregulation exercise. The aim of the reviews was to see whether the burdens imposed by the legislation could be reduced, but some complex issues were raised and the responses to both reviews were very mixed. In the case of the pedlars legislation they were fairly evenly divided, but a small majority favoured strengthening the controls.
The hon. Gentleman has argued for pedlars to be brought within street trading controls. That would require primary legislation and he realises the difficulty involved in that. We need to recognise that such an option is available, but be cautious about using it. Nevertheless, I shall certainly consider the points he has made about the problems posed by pedlars. Similar arguments were raised in some of the responses to the 1994 consultation paper and I accept that they are the subject of real concern.
At this stage I have reached no firm conclusions about the merits of further action in relation to either pedlars or street traders. Although I am not yet persuaded that increasing controls on pedlars would greatly alleviate the difficulties experienced by street traders and local authorities, I can assure the hon. Gentleman that I will look carefully at the issues in considering our future policy. In doing that, I shall reflect carefully on the points that he and the hon. Member for Somerton and Frome have raised during the debate.

Reefs

Mr. Tam Dalyell: Only those who, like my hon. Friend the Minister and me, have had the good luck to swim in one can appreciate the full glory that is a coral reef. There are many reasons, medicinal and otherwise, why they are important as the cradle of fish. I thank the two young RAF officers who took me diving at an enforced stop at Gan in the Indian ocean while I was returning from an Inter-Parliamentary Union armed forces visit in 1965. I shall for ever be grateful for the opportunity to swim in the Indian ocean, which led to a lifelong interest.
The World Conservation Monitoring Centre in Cambridge, in particular Dr. Mark Spalding and the director Dr. Mark Collins, together with its associates in the United States and the Philippines, has produced an important report on the state of the world's coral reefs, called "Reefs at Risk". I should like to use my luck in securing this debate to bring the issue to the top of the Minister's in-tray. So many important reports get publicity and then gather dust.
"Reefs at Risk" highlights the crucial role of coral reefs in alleviating poverty—by supplying food and foreign tourist income—and as a natural coastal defence. Many of our fellow Commonwealth nations have coral reefs, including some of the poorest nations. Do the Government agree that the conservation of such natural resources is fundamental to their policies for poverty alleviation? I applaud my right hon. Friend the Secretary of State for International Development and my hon. Friend the Minister for putting poverty alleviation at the top of their agenda. What can the Government do to support integrated sustainable development and coastal conservation in such countries?
The UK is among the largest coral reef nations, with more than 6,000 sq km of coral reef located in our overseas territorial waters. "Reefs at Risk" says that many of those reefs, particularly in the Caribbean, are in areas of high risk from human damage. Praise is certainly due to territories that have set aside marine parks and the resources to manage those sites, but the majority of coral reefs in those territories remain without any form of legal protection. What further measures do the Government propose to protect and manage those precious resources?
Proposals exist for a massive development of condominiums and a deep water harbour in East Caicos, Turks and Caicos Islands, which will include building work and degradation in an existing national park. Similar destructive developments are planned on some of the small islets off Anguilla, including the development of a rocket launching station at Sombrero Cay. Will the Government give a complete assurance that they will not allow those developments to take place at the expense of coral reefs?
The Government's new British Indian ocean territory conservation policy, covering the UK's largest area of reefs, which includes some of the most pristine reefs in the Indian ocean, is an important step forward that deserves high praise. What progress is being made towards the designation of Ramsar sites and strict nature reserves in that area, as laid out in paragraph 19 of "Reefs at Risk"? Will the Government also give an assurance that

they will continue to maintain a fisheries patrol to prevent further illegal fishing incursions into the region from neighbouring countries?
I am on delicate ground here. I believe—this is not a universal belief—that fisheries protection is essential. A naval presence is necessary to protect the reefs from the depredation of Taiwanese, South Korean and other massive fishing trawlers that hoover up the bottom of the sea. I point out to my hon. Friend the Minister with some shyness that there is a huge base at Diego Garcia, which is British territory, not American, albeit that the base there is the biggest outside the continental United States. It would not be impossible to have a naval presence. I am not asking for an answer on that delicate issue today, but at least the Department might reflect on it.
Noting the Government's continued support for biodiversity conservation through the Darwin initiative and this country's position in coral reef conservation and science, it is surprising that the Darwin initiative has selected few, if any, reef projects. Does the new report provide a useful basis on which to prioritise and support future projects?
Will the Government consider supporting similar analyses for other coastal ecosystems that are vital for the people who live there? I am thinking particularly of mangrove ecosystems and poorly known but equally important seagrass beds. Part of the problem is that the huge fish that are found in reefs are extremely valued in places such as Hong Kong. They are captured live and set out in stalls, fetching huge sums. There is also a great temptation to catch fish for aquariums. We human beings must make up our minds what we are going to do about the problem, because sooner rather than later the great glories that are the ecosystems of the coral reefs will be in danger.
It is my wont to be lucky in Adjournment debates. As many of those who will read the report of this debate are understandably more interested in what the Government have to say than in what I have to say, I shall give ample opportunity to my hon. Friend, who has taken a deep personal interest in the issue. I place on record my thanks to my right hon. Friend the Secretary of State and my hon. Friend the Minister and to their ever-helpful officials, who have also displayed a passionate interest.

The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): I congratulate my hon. Friend the Member for Linlithgow (Mr. Dalyell) on his success in securing yet another Adjournment debate. When I was an Opposition Back Bencher, I knew how difficult it was. My hon. Friend has a talent that all Back Benchers should try to emulate. I also congratulate him on his interest in science, particularly this important issue. I understand that he is the parliamentary correspondent of the New Scientist and that he takes an interest in a range of issues in that capacity.
The Government also welcome the recent publication, "Reefs at Risk". We are glad for this opportunity to outline our response to this important environmental and development challenge. My hon. Friend has given me plenty of time to do so. In passing, I should like to point out that it is a great tribute to the House of Commons—readers of Hansard and visitors should note this—that we


can move seamlessly from the problems of pedlars in the Isle of Wight to issues relating to coral reefs in oceans around the world.
The Government consider the publication of the report a timely wake-up call to the global community. This is the year of the oceans. As my hon. Friend will know, the G8 Environment Ministers agreed in April to promote greater and more co-ordinated action on marine biodiversity. We are at one with my hon. Friend in his concerns.
The coral reefs of tropical oceans are renowned for their beauty, as my hon. Friend and I have experienced from swimming in the oceans. I saw for myself in Belize and more recently in Nassau the beauty of the coral reefs, so I can underline what my hon. Friend said about that. They are also important as centres of biodiversity and a source of livelihood for many poor people. Television and tourism mean that even in our northern location—my hon. Friend and I live in relatively far northern locations—we are increasingly aware of the intrinsic values of the coral reef. We are often less aware of the threats to reefs, which the report brings out well.
The principal causes of decline are clear: there are five. The first is unmanaged coastal development where there is an inadequate institutional and legislative framework to ensure proper resource management. The second is over-exploitation of particular goods and services by destructive fishing or intensive tourism and the marine curio trade. The third is land-based pollution from domestic, industrial and agricultural sources. As tourism grows, such pollution increases. The fourth is sea-based pollution from mineral exploitation and cruise ships. The fifth and final cause is climate change and tropical storms, which physically damage the coral reefs. The challenge for us all is effectively to address those causes while, at the same time, meeting the legitimate development needs of increasing numbers of people and reducing the number of people living in absolute poverty.
I was grateful to my hon. Friend not just for mentioning the White Paper and the Government's commitment to poverty elimination but for his endorsement of it. The key aim of the Government's international development programme is the elimination of poverty. If he does not mind, I shall correct him slightly. He used the old term "alleviation". We are making it clear that we want not alleviation but elimination and eradication of poverty in poorer countries through the promotion of sustainable development. Our specific objectives are: policies and actions that promote sustainable livelihoods, better education, health and opportunities for poor people, and protection and better management of the natural and physical environment, which is what this debate is about.
The Government strongly support—indeed, they have been a leading proponent of—the international development targets to reduce by one half the proportion of people living in extreme poverty by 2015, and to implement national strategies for sustainable development in all countries by 2005, so that we can ensure that trends in the loss of environmental resources are effectively reduced at both global and national levels by 2015.
Concern in the United Kingdom over declining coral reef resources is not new. The Government and their predecessors have been aware of the issue for some time

and have funded studies by some of the British scientific institutions, which have well-deserved international reputations for excellence in coral reef research.
I should emphasise that the degradation of the coral reef systems and other tropical coastal ecosystems, such as mangrove forests, which my hon. Friend mentioned in particular, can have a devastating impact on the livelihoods of very poor people in developing countries. I know that he is especially concerned about that. Such people, who often lack access to land or alternative forms of employment, are highly dependent on the resources and services that the reefs can offer. We must understand that, for poor coastal communities, degradation of reefs leads to loss of food security, destabilisation of the community structure and, often, migration to the urban centres, which creates increasing problems. If we are to protect coral reefs, we need to focus on the interests of local people to whom, quite understandably, global values may mean little given the grinding burden of poverty that they face. I shall offer just a few examples.
Astonishingly, coastal communities in the Maldives and Sri Lanka depend on reef fisheries for about 80 to 90 per cent. of the animal protein in their diet. In comparison, only 10 per cent. of the animal protein in the average UK diet is fish. That shows just how dependent such communities are. Furthermore, in the Maldives—a country of more than 1,000 coral islands—a recent study showed that some 17 per cent. of households have no source of income other than reef fishing, and that average household income varies between $25 and $77 a month. More than 60 per cent. of households in the coastal communities of Fiji, for example, are dependent on coral reef fisheries as a source of nutrition and income. Such dependence on the coral reef fishery is common in island states. Degradation of reefs that support the fishery can create poverty.
Other households in coastal areas are equally dependent on coral mining, which destroys reefs to manufacture lime and other building materials. In some coastal communities of east Africa, 85 per cent. of households are dependent on income from coral mining. More than 5,000 people earn a livelihood from coral mining in Sri Lanka. The ability of some coastal communities to build affordable housing depends on coral mining, yet their livelihood also depends on a healthy reef ecosystem. Such spirals of environmental degradation and poverty can be resolved only by sustainable development.
My hon. Friend raised the question of the theft of fish. Since the 1960s, Governments of south-east Asia have been concerned by the use of sodium cyanide solution to stun and capture coral reef fishes, as my hon. Friend described, which are exported for the aquarium trade. There is also some evidence of collateral damage to corals and other organisms. Regrettably, the use of sodium cyanide has become widespread, even though it is illegal in many countries. I am glad to say that the Government of the Philippines have taken a leading role in the fight against the users of sodium cyanide. In partnership with local environmental organisations, they provide training for fishermen in alternative catching techniques and have established laboratories to test live fish exports for traces of sodium cyanide. As a consequence, cyanide fishing has been reduced in the Philippines. We applaud that example of environmental management in action.
Traditional community management systems have existed in some small island states for centuries and have controlled the sustainable use of resources of coral reefs. Pressures caused by increasing populations and inappropriate or badly planned development are breaking down the long-established systems, and community-based management alone may no longer be sufficient to contain the threats to reefs.
As "Reefs at Risk" makes clear, the causes of decline in coral reef health are in any case often beyond the traditional control of coastal communities. The origin of pollution and sedimentation is often far inland. For example, the recently documented decline of a coral reef system in the Philippines identified the cause as inland logging operations, which increased soil erosion and consequent sedimentation in coastal waters, killing corals and reducing fish populations. The main benefits of logging were obtained by commercial companies. The main costs to the environment, however, were felt by the poor in the coastal community. Analysis in the Philippines demonstrated that long-term revenue from tourism and fishing on a healthy reef system would have been $40 million greater than that generated by logging. Therefore, it would have been far better to go down the tourism and fishing route. We must encourage more of such analyses, as well as planning mechanisms that use the resulting information.
My hon. Friend put his finger on the key to the issue. An integrated approach to planning is essential if Governments are to protect the coral reefs and the livelihoods that depend on them. The Government are committed to such an approach in our development co-operation programme. There is a recognised planning framework to achieve it, which is known as integrated coastal management. That enables communities to participate with the Government in the identification and management of competition and conflict in the use of coastal resources. The Government have helped to introduce integrated coastal management, to address coastal resource use issues in coral reef and mangrove management on the island of Sumatra in Indonesia, and in South Africa. We are also funding research to resolve resource use conflicts in coastal areas of Sri Lanka and Vietnam. A great deal is being done by our Department in integrated coastal management.

Mr. Dalyell: I can confirm what the Minister has said. I attended the recent seminar at Canning house, which he will know well from the days before he was a Minister. When I asked about the reefs report, the Mexican ambassador, Mr. Ornate, confirmed the value of joint projects in the Caribbean, so it is not only the Government who say that such co-operation is good, but the Mexican ambassador speaking on behalf of the Latin American ambassadors.

Mr. Foulkes: I accept what my hon. Friend says. Other Governments are increasingly concerned about the matter. Canning house provides an excellent forum for such discussions.
My hon. Friend would agree that the basis of planning is knowledge, and the "Reefs at Risk" report makes it clear that it is based on indications of potential threat. My Department is engaged, with a number of international and national organisations, in developing a better understanding of the relationship, which we have been

discussing, between protection of the coral reef and coastal environment and the eradication of poverty in coastal communities.
Assessment of change in reefs is the first step, and we have funded the development of cost-effective methods to assess the quality of coral reefs, and provided support to, for example, British Virgin Islands and Anguilla to map their coral reefs. We were able to help the Government of the Maldives to identify the effect on their reef fisheries of coral rock mining, and subsequently to develop a management system to accelerate the recovery rate of the ruined reef.
Our current programme of support to the Intergovernmental Oceanographic Commission of UNESCO includes funding and expertise to develop a regional component of the global coral reef monitoring network, which will implement a coral reef monitoring plan in south Asia. That has produced immediate benefits in defining the extent and impact of recent damage to coral in the Indian ocean because of high sea temperatures. We have also helped the Government of Anguilla to assess the impact of tropical storms on their coral reefs and supported research to assess the potential impact of global warming on coral reefs.
I hope that my hon. Friend will agree that the UK Government have been giving a great deal of help. He has been very effective in bringing the matter to the top of the ministerial agenda in the UK.

Mr. Dalyell: I agree that the Government have been effective, but the $64 million question is how one protects coral reefs against the depredation—that is not too strong a word—of trawlers from certain countries. That begs the question whether military force can be deployed in the form of fishery protection. I do not ask for an answer to that question in an Adjournment debate, but I hope at least that the Government will discuss with UNESCO and other international authorities how the policing is to take place. In particular, I hope that they will discuss with the Americans the critical issue of the British Indian ocean territories' coral reefs and whether there should be some coral reef fishery protection operating out of Diego Garcia.

Mr. Foulkes: I shall deal directly with that question. Until 1996, the territories' Administration chartered a fisheries patrol vessel during the tuna fishing season, and only from November 1996 to February 1998 was there continuous coverage. The local Administration considered that that was not a cost-effective solution to inshore fishery protection, and the vessel was withdrawn at the end of its charter, which is what my hon. Friend was alluding to. The territories' Administration now intend to have a patrol vessel in place for the start of the next tuna fishing season in November 1998, and in the longer term, they hope to be able to purchase a vessel to ensure all-year-round cover. The Administration are actively considering how best to take that forward.
I hesitate to venture on to the subject of naval protection, which my hon. Friend mentioned, but no doubt he will be able to raise it with some of my colleagues. I hope that he will be reassured by what I have already said about the fisheries protection vessel.
My hon. Friend mentioned the Darwin initiative, which is managed by my colleagues in the Department of the Environment, Transport and the Regions. The Darwin


initiative for the survival of species is a Government-funded initiative that supports the efforts of British institutions to safeguard the world's biodiversity. Since the initiative commenced, about 5 per cent. of its funds—a substantial proportion—have been invested in six projects focused on coral reefs in Belize, Egypt, Kenya, Sri Lanka, Mozambique and St. Lucia. A particularly welcome project has been helping schools in the Caribbean to implement coral reef protection policies. I know that my hon. Friend was once a teacher on a cruise ship, so he will be aware of the importance of education on that matter.
The Government also actively enforce the protection given by the Convention on International Trade in Endangered Species to more than 250 species of corals used in the ornament and jewellery trades. In 1995 and 1996, customs seized more than 2,500 pieces of coral that were being imported without the necessary permits.
My hon. Friend will also welcome the fact that when the Under-Secretary of State for Foreign and Commonwealth Affairs and I attended the CARICOM conference at Nassau in February, we announced a British Government-sponsored regional workshop to consider the protection of marine biodiversity in the Caribbean region. We shall co-host that with the Government of Jamaica. The meeting will be held at the end of October at Montego Bay, which the "Reefs at Risk" report identifies as having some seriously degraded reefs. That will, we hope, concentrate the minds of the delegates at the workshop.

Mr. Dalyell: I should like to register the appreciation for the work of customs of those who are most concerned with this issue. Asking customs officers to identify coral reef is a pretty tall order, but they have done an excellent job.

Mr. Foulkes: I am grateful to my hon. Friend, and I am sure that his comment will be passed on to those concerned.
My hon. Friend mentioned overseas territories. We take seriously our responsibility to our overseas territories, and I am glad that we have been able to rename them, because overseas territories is a much more appropriate term than dependent territories. Our objective is to promote sustainable development. That requires that economic development proposals are appraised for their potential interactions with the environment.
Proposed developments in the Turks and Caicos Islands such as the East Caicos development project—which my hon. Friend mentioned—and the Grand Turk harbour

development, are to be subjected to full environmental impact assessment before approval. Those assessments are to be carried out by consultants acceptable to the appropriate Government Department of the Turks and Caicos Islands. Similarly, the proposed development at Sombrero Island in Anguilla, to which my hon. Friend referred, is currently being subjected to a full environmental impact appraisal by an environmental consultancy firm, ICF Kaiser. UK Government officials have worked with ICF Kaiser to define the scope of the environmental assessment for that development, and the report will be a significant factor in deciding whether to allow the development to go ahead next year. I hope that that reassures my hon. Friend.
Given the dependence of some of the UK overseas territories on the quality and health of their coral reefs, the Government recognise that such assessments are important, and we shall offer support wherever possible. However, recent correspondence with staff at the World Conservation Monitoring Centre has suggested that the coral reefs in British overseas territories are in comparatively good condition, and we welcome that independent statement from such an authoritative source.
We greatly welcome my hon. Friend's initiative in raising the matter today. I was particularly pleased that he paid such a warm tribute to many of the members of staff of the Department, who do much to understand the issue and brief Ministers on it. The Government recognise the important role that coral reefs can and should continue to play in sustainable development. It is important not only to monitor what is happening but to develop—with the participation of local communities and using partnerships between Government, business and civil society—effective ways of managing and sustaining the goods and services that derive from coral reefs around the world. I assure the House and my hon. Friend that the British Government will, with the considerable expertise that is available in UK, continue to play a leading role.
I hope that my hon. Friend has been reassured not only on his specific points that I have dealt with, but on the general matter of our deep concern about the report. We are looking at the implications and taking serious account of it. We shall deal with all the points that arise from it.

Mr. Dalyell: Unlike my 14 Adjournment debates on Lockerbie, I should like to put it on record that I am extremely satisfied with the content and tone of my hon. Friend's reply.

Mr. Foulkes: I cannot comment on any other subject, but I thank my hon. Friend for his generous commendation.

Oxted and Limpsfield Hospital

Mr. Peter Ainsworth: I am grateful for the opportunity to bring before the House a matter that has, for some years, been the subject of grave and almost continuous concern to the people of Oxted and the surrounding area. In doing so, I am acutely aware that I am touching on issues that have divided and continue to divide the local community, health care professionals and the district council.
Let me say at once that I have not come here today with a ready-made solution to the various problems, nor am I here to carry the flag for any particular group or faction. However, I should like to thank the many people who have taken the trouble to keep me informed of developments: the health authority; the community health council; the trust; the GPs in Oxted and elsewhere; Mr. Josh Cosnett of the Save Oxted Hospital action group, who has tirelessly advanced the cause supported by many petitions; Mr. Graeme Waller; Councillor Gordon Keymer; the Rev. Guy Bennett; and others to whom the future of this vital local resource is paramount.
I make no apology for having no tailor-made remedy of my own. I have brought the matter to the House today to enable the Minister, who has more cause than most to realise that being in government is not all fun, to set out clearly and unequivocally his position and that of the Government, so that we can achieve a rapid and satisfactory outcome to a set of problems that have persisted for too long.
Let me start with a statement on which, I hope, all can agree. Oxted and Limpsfield (War Memorial) hospital, although originally sited elsewhere, was opened in its present position in 1939, and building work was completed shortly after the second world war. It was funded by public appeal. The hospital has thus served the community of Oxted and the surrounding area for nearly 60 years, providing both out-patient services and in-patient care. Not surprisingly, it has come to be regarded as a jewel in the Oxted crown. My own family has had cause to use the out-patient services, and many friends have passed through its doors or stayed overnight through the years.
The sad modern history of the hospital began about five years ago, when East Surrey Healthcare NHS trust announced that the building was in a poor—indeed, terminal—state of repair. I know that some people dispute that, but most accept it as a working proposition. A suggestion that the hospital should close and its services be relocated to the nearest accident and emergency hospital in Redhill gave rise to public outcry.
In the face of that, the trust was forced to reconsider. It came forward with a hospital redevelopment proposal, using the existing site and an adjacent one and providing 20 NHS beds. That was to be funded partly by the NHS and partly by the development of housing on the hospital grounds. That appeared to be good news, but that is the point at which trouble started and things began to go badly wrong.
After months of preparation and NHS expenses running to hundreds of thousands of pounds, the local authority, Tandridge district council, first insisted that the new housing should include additional affordable homes,

and then refused planning consent on grounds of excessive density. To that frankly perverse act, we owe much of the trouble that has ensued.
Various attempts were made to recast the proposals in a form acceptable to the local authority, but they came to nothing. There was even a march through the streets of Oxted—the only march I have attended in my constituency, and possibly the only one that has ever taken place there—under the banner "Save Oxted Hospital". It is ironic that the march was also attended by several councillors who had actively participated in the demise of the original redevelopment scheme.
In March 1997, the health authority issued a consultation paper, which, after minor alteration, formed the basis of a proposal published in June 1997. It envisaged the building of a new out-patient hospital on the existing site to include therapies and an X-ray unit; and 10 NHS beds would be provided in a private nursing home. The proposal was rejected by the CHC on a number of grounds, not least that it envisaged a reduction in the number of beds from 20 to 10. Although there is disagreement in the community about where the beds should be located, there is a strong feeling that halving the number of local beds is not acceptable. The 20 beds currently available are in great demand, for both geriatric and recuperative care.
Despite the CHC's objection, on 9 September the Minister wrote to me announcing his decision to close the hospital, and to endorse the health authority's proposal. Thus, Oxted joined the list of 25 war memorial hospitals currently threatened with closure. I understand that that is to be the subject of a mass lobby next week, and recently the issue was eloquently raised in the House by my hon. Friend the Member for North Norfolk (Mr. Prior).
The Minister added two provisos in his letter: first, that the 10 beds being removed from Oxted could realistically be provided in East Surrey hospital; and, secondly, that a suitable private sector partner could be found for the proposed nursing home development. The Minister will be aware that, earlier on, a possible private nursing home partner had dropped out. A deadline was set for March 1998, which was later extended, at the CHC's request, to May, primarily to accommodate discussions with a potential private sector benefactor. The second deadline has now passed: no new private sector nursing home provider has appeared, and continued bed blocking in East Surrey hospital casts doubt over whether the extra demand for beds there can be met.
Meanwhile, there have been several developments that are important to the context in which the struggle to maintain a hospital in Oxted is taking place. In no particular order, they are as follows. The East Surrey Healthcare NHS trust has merged with the Crawley Horsham NHS trust; the consequences of the merger are still being absorbed, and a new chief executive has been appointed to manage the combined trust. A new chairman will shortly take up position in the health authority.
A primary care group is being set up to embrace a huge area, from Limpsfield in the east to Reigate in the west. That is giving rise to extra bureaucracy, and it means that any decision affecting provision in Oxted must now be seen explicitly in the light of its implications for other parts of the area—for example, it is obviously important that developments at Oxted do not entail no developments in Horley.
In addition, to no one's surprise, we are told that the financial position of the health authority has deteriorated since March 1997, which is clearly unhelpful; and that the merged East Surrey and Crawley trust has a deficit of £4 million, which is hardly a propitious context in which to be considering a major investment in Oxted. I understand that that might no longer be a problem, as the latest news is that responsibility for community health care in the Oxted area is to be transferred to a trust in Croydon. However, I am told that that trust, too, has recently suffered a cut in funding. While all that turmoil is going on, nothing has been achieved to address the problems in Oxted, where, understandably, staff recruitment has become more difficult, and general frustration has mounted.
I should be grateful if the Minister could clarify certain specific questions. First—I realise that this is something of a fast ball, so perhaps he can write to me—is it true that the financial model used by the health authority to date to assess the cost of providing beds at Oxted assumes that the running costs will be the same as those in the hi-tech accident and emergency hospital at Redhill? If so, is it not rather unusual, and does the Minister believe that it is appropriate?
Secondly, does the Minister accept the view of local GPs and others, that a minimum of 20 beds is required to meet the current and growing future need of people in the locality? Thirdly, how do matters now stand between the NHS and the local private benefactor, who has reportedly promised a substantial sum towards the provision and maintenance of extra beds in Oxted? What is the Government's position on other offers of private funding from the local community for rebuilding the hospital?
Fourthly, what progress has been made towards satisfying the two provisos set out in the hon. Gentleman's letter of 9 September? Fifthly, what will happen if those cannot be met, given that the chief executive of the health authority is reported to have said on 9 March:
We can no longer fund the current level of services in Oxted"?
Sixthly, what will happen if the district council blocks the sale of the land necessary for the building of the nursing home? What powers have the Government to get their way, assuming that there is no change in direction? As I understand it, the district authority at present intends to block the sale of that land.
Mrs. Marlow of South Thames national health service executive has written that the Minister now regards the matter as one of local interest. I ask him not to wash his hands of the issue, but to work to ensure a successful outcome, based on the Secretary of State's words:
I have made it clear that we would like to promote community hospitals because we want people throughout the country…to be able to turn to an efficient, effective, high-quality health service that is close to home."—[Official Report, 27 January 1998; Vol. 305, c. 142.]
The Minister's actions over Oxted and Limpsfield war memorial hospital will be a test of that commitment.
Bearing in mind the story on the front page of The Times today, which tells us that a children's ward in Greater Manchester has been reprieved from closure on the eve of a visit from the Secretary of State, would the hon. Gentleman extend to his right hon. Friend a cordial invitation to visit Oxted hospital at his earliest convenience?

The Minister of State, Department of Health (Mr. Alan Milburn): It is always a pleasure to reply to the hon. Member for East Surrey (Mr. Ainsworth), on this and other issues. As he said, I get to deal with many fun issues in the House, but this is not one of them. It is a serious matter, which is of concern to him and his constituents.
As the hon. Gentleman rightly said, community hospitals are a valued part of the national health service in many parts of the country. Patients often value them because they tend to deliver services in a friendly and homely way, which makes change extremely difficult. Change is not peculiar to this Government, or to the previous Government; it is endemic in the national health service, and it affects community hospitals just as it affects other parts of the service.
The hon. Gentleman is a strong supporter of Oxted and Limpsfield community hospital in his constituency, and I understand his concerns, which have also been expressed to me by local people and organisations. He will recall that I met representatives of the East Surrey community health council and the Save Oxted Hospital action group some months ago. Perhaps it would be useful if I recount how we got to the present position, and where things stand in trying to answer the hon. Gentleman's six questions.
In the first place, changes were necessary in the area, because, as the hon. Gentleman rightly said, health needs were changing, and it is broadly agreed that the hospital is in a poor state of repair. The local health authority has a responsibility to ensure that it makes the best use of the public money that it receives. It decided that it would be more cost-effective and appropriate to modern health care facilities to consider a new building in Oxted, rather than upgrading the present building.
As the hon. Gentleman knows, the proposal was to provide out-patients, minor injuries, X-ray, diagnostic and physiotherapy services in a brand new NHS facility. Changes would also be made to the number of beds available—acute beds would be transferred to East Surrey hospital, and beds available for the less acutely ill would be purchased from a private nursing home and managed by local general practitioners.
As the hon. Gentleman said, following East Surrey community health council's objections to the health authority's recommendations following consultation, I considered those proposals late last year, bearing in mind all that had been said locally. When I made my decision to approve the proposals by East Surrey health authority for the re-provision of Oxted hospital, I did so on two firm conditions, and I expect those conditions to be fulfilled in full. The first was that a viable private sector nursing home partner could be found; the second that adequate provision should be made at East Surrey hospital in Redhill to absorb the likely number of elderly patients being admitted there from the Oxted area.
I asked for an implementation plan from East Surrey health authority, and I subsequently extended the deadline for the production of that plan by two months, to the end of May, to enable further local discussions to take place. The appearance on the scene of a potential local benefactor might be a help, but it has certainly also been a hindrance in delaying the implementation of the overall plan.
I made my decision because the proposals will provide modern, high-quality health care for people living in south Tandridge. There would be flexibility, with local GPs managing the beds; and acutely ill elderly people, who need consultant care in the best possible modern setting, would have a full range of back-up facilities available, which might not always be available in that sort of setting.
With regard to the private sector partner, I understand that a number of expressions of interest have been received from nursing home providers by Surrey and Sussex Healthcare NHS trust, which are subject to further discussion, and those debates continue. To build a new nursing home on the existing hospital site, a land swap will be necessary, so that the existing hospital can stay open until the new facilities are ready. I understand that discussions are taking place with Tandridge district council about the land swap.
Alternatively, the existing hospital could be closed and demolished, and a nursing home built on the existing site. If that option were chosen, I understand that the health authority would purchase beds from existing nursing homes in the Oxted area, which would be used until the new nursing home was available on the Barnett Shaw site. I will say in a moment what I expect Tandridge district council to do to be helpful.
As the hon. Gentleman knows, at present GPs have access to six beds in Oxted hospital. As a result of local concerns expressed during the consultation exercise, the health authority helpfully increased its planned re-provision from six to 10 beds, giving the GPs an increase in access to local services. I hope that he also thinks that helpful. The use of a nursing home, which is likely to have around 40 beds in total, is designed to give maximum flexibility to accommodate local needs. Therefore, 10 GP beds in the nursing home is the minimum guaranteed future commitment. If the local primary care group can arrange treatment and care differently for its patients, it may be able to care for more patients in the new facilities in Oxted, subject, of course, to other demands, such as emergencies.
On the condition concerning capacity at East Surrey hospital—another important matter that the hon. Gentleman raised, and about which I am concerned—the regional office of the NHS executive is closely monitoring the plans by the Surrey and Sussex Healthcare NHS trust for the reconfiguration of services at the acute hospitals at Crawley and Redhill. The plans will now need to take full account of changes to service levels at Oxted and access for patients in their areas. Once finalised, those plans will be subject to full consultation.
Two further issues warrant a mention. First, the re-provision is being planned at the same time as a new, modern, primary health centre is being developed in Oxted. That will provide high-quality primary care facilities for patients in the centre of the town, and will complement the hospital re-provision. The GPs in the town will have access to a range of new, high-quality primary, community and nursing home facilities, all of them readily accessible to the local population. As the local practices develop into a primary care group, they will be able to have more say in the way in which those facilities are used for their patients. Frankly, it will be for

GPs to take those decisions, not bureaucrats sitting in health authority offices; I hope that the hon. Gentleman welcomes that sort of development.
There will be more flexibility for patients to be supported in their own homes, with the back-up of local, low-tech beds, and barriers between health and social care will be overcome, which is crucial, particularly to deal with the complex problems that many elderly patients often face. They require the support not merely of NHS services, but of social and housing services. The new primary care groups and the facilities that are being provided in the area will all help to that end. The availability of nursing home beds in Oxted will support primary care, and will therefore be an important element in the development of services for local people.
Secondly, since making my decision at the end of last year, a possible benefactor has emerged to provide a donation towards the re-provision of services, as the hon. Gentleman said. That was discussed locally, but initially no consensus could be reached on what form alternatives might take—the health authority listened carefully to the benefactor's views, but declined the offer. Since then, the health authority and representatives of the benefactor have had further discussions to establish whether a donation could be used to augment the proposed NHS in-patient provision.
Irrespective of whether charitable funding is available, the hon. Gentleman should be reassured that the people of Oxted will continue to have access to high-quality NHS-funded health care. I know that negotiations are progressing in, I hope, the spirit of co-operation that we are striving to encourage in the NHS. The best solution for people in the area is for local agreement to be reached about the future of their local services. I cannot say when the negotiations will finish, as I am not party to them.
The hon. Gentleman's first question concerned the financial background. I do not have the information with me, so I hope that, as he suggested, he will allow me to write to him on that. I know the concern that has been expressed locally, and I shall be happy to address that directly.
I hope that the hon. Gentleman is reassured by the fact that the implementation plan that is now in place will result in new in-patient, out-patient and therapy facilities, as well as a minor injuries service, being available in Oxted by the summer of 2001. The time scale and detail of the re-provision depend crucially, as he rightly said, on the planning decisions taken by Tandridge district council. The local authority will no doubt be mindful of the need for a rapid decision to allay the concerns of local people about the future of health services in the town, and I hope that it has listened to what both the hon. Gentleman and I have said today.
I have had a significant number of representations about the matter, and I stress that the final form of the re-provision—which depends on a number of factors that I have outlined; the hon. Gentleman knows the background to them—will be for local people and organisations to agree, albeit within the caveats that I set out in my approval of the plan. I shall not be revisiting my original decision, which I expect to be implemented in full.
I assure the hon. Gentleman that the South Thames regional office will be responsible for ensuring that the detail of the scheme accords with the terms of my approval of the Oxted and Limpsfield hospital re-provision scheme. The regional office is keeping a close eye on the matter, and I am sure that officials there will be helpful in answering any of his detailed concerns. If he has further difficulties,

I should be happy to deal with them personally, but I hope that I have been able to deal with the majority of the concerns that he has raised today.

It being before Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.

Oral Answers to Questions — INTERNATIONAL DEVELOPMENT

The Secretary of State was asked—

Development Awareness

Mr. Hugh Bayley: What steps she is taking to inform the public about her Department's work. [46864]

The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): As we made clear in our White Paper, the Government attach great importance to increasing development awareness in the United Kingdom. To that end, my right hon. Friend the Secretary of State and I have been visiting every corner of the country to publicise the commitments in the White Paper. My right hon. Friend will be in York next Wednesday. We are in the process of establishing our development forum, which will meet regionally and then nationally each year to discuss development strategy, and I am chairing the working group on development awareness so that we can strengthen our work in the field.

Mr. Bayley: In the wake of the pain of last night's football game, does my hon. Friend agree that the world would be a much better and safer place if people in this and other countries took as much interest in world development as they do in the world cup? Will he discuss with ministerial colleagues in the Department for Education and Employment the importance of getting a world studies strand in the school curriculum?

Dr. Norman A. Godman: A Hearts supporter.

Mr. Foulkes: My hon. Friend is right to say that I support the team that won the Scottish cup this year. Although I am a Scotland supporter, I sympathise with all the England supporters over the tragedy that took place last night.
A great deal is being done to ensure that development studies are included in the curriculum. I have an A-level geography examination paper from the London examination board, which includes questions about development. We have had discussions with the Department for Education and Employment about giving development a higher profile, and some members of our development awareness working group, including myself, had a meeting with Professor Bernard Crick, who chairs the working party on citizenship, to discuss including global citizenship in the curriculum. I hope that my hon. Friend agrees that we are already doing a great deal.

Mr. Gary Streeter: Does the Minister recall his party's manifesto promise that, in government, Labour would increase the aid budget, and will he tell the British people why, in the first 12 months of the Labour Government, according to figures from the Organisation for Economic Co-operation and Development, the United Kingdom aid budget has been cut by 2.2 per cent?

Mr. Foulkes: Let me make it clear that I remember all our manifesto commitments, each of which we are

implementing. This year, we have doubled the budget for development awareness. When the comprehensive spending review is published, the hon. Gentleman will know exactly what we intend to spend on international development, and it will be clear to the British public and to the Opposition that we will spend a great deal more over the next few years than the previous Government did.

Mr. Streeter: The Minister has not answered the question. The Government have been in power for 14 months and have presided over a cut in the UK aid budget. They found extra money for schools and hospitals; why have they not found extra money for the aid budget? Is this not yet another new Labour broken promise?

Mr. Foulkes: The hon. Gentleman is talking about the calendar year 1997, half of which was under the previous Government. That Government inherited an aid budget of 0.51 per cent. of gross national product and rising; it left us with 0.27 per cent. and falling. We are committed to turning that round in the course of this Parliament.

Mr. Streeter: When?

Mr. Foulkes: If the hon. Gentleman will have a little patience, he will see, when the comprehensive spending review is published, that the changes under Labour will start to reverse the decline.

Good Governance

Mr. Nicholas Winterton: What steps her Department has taken to encourage stable and democratic government as part of its aid programme. [46865]

The Secretary of State for International Development (Clare Short): Good governance is essential to the achievement of sustainable economic growth, which is the only way to achieve a lasting reduction in poverty. It is clear from experience that conditions imposed on reluctant Governments in return for aid or loans tend to fail to secure reform, while Governments who are committed to poverty reduction use aid to invest in human development and economic progress. Good governance is therefore crucial to development, and it is the focus of much of our work. In 1997–98, we committed more than £70 million in efforts to promote good governance, including democratic reform.

Mr. Winterton: I thank the right hon. Lady for that reply. I presume that she agrees that good governance is an essential factor in the determination of which states are best able to tackle both poverty and debt repayment. Does she accept that multi-party government is another essential element in ensuring that we can achieve more through United Kingdom aid, and reduce poverty and deprivation in countries to which we give aid?

Clare Short: I entirely accept that, without good governance and the intention to promote poverty reduction and sustainable economic growth, no amount of conditionality or intervention will succeed. We need to back Governments who are determined to reduce poverty,


and to introduce optimistic models. When Governments are not determined, we must find ways—for instance, through non-governmental organizations—to assist people who are suffering; but sustained development will not be possible in those countries.
In general, I agree with what the hon. Gentleman said about multi-party democracy. He may have had Uganda particularly in mind. I remind him that there is a commitment for the people of Uganda to decide in 2000 whether they want multi-partyism, or prefer to retain their present system of democracy. We say that that is for the people of Uganda, not us, to dictate; but the principles of democracy, and the ability to vote out a Government and local representatives, are key, and must be observed everywhere.

Mrs. Alice Mahon: As my right hon. Friend will know, the NGOs in Afghanistan have now been moved into very unsuitable accommodation, and the persecution of women in that country by the odious Taliban continues. What, if anything, can the international community, and those who—obviously—are still giving aid to the persecuted in Afghanistan, do in the way of sanctions, or making the Taliban behave humanely towards women and children?

Clare Short: My hon. Friend is absolutely right. The Taliban has, for example, attempted to prevent women in difficult labour from going to hospital, because women are not allowed to go to the same hospitals as men. That is a fundamental issue of human rights: it is crude apartheid, and is causing enormous suffering. We are trying to get the international community to agree on an absolute precondition of equal treatment if any help is to be given, and the Red Cross has bravely stood by that. As long as everyone stands together, I think that we can secure that position, but it is a constant battle.

Mr. William Cash: Is not one of the best ways of ensuring democratic and stable government in many of those regimes—especially in the poorest countries—to ensure a proper reduction in debt, and the interest on debt? As chairman of the all-party parliamentary campaign for Jubilee 2000, may I ask the Secretary of State to give earnest consideration to ensuring that that debt is reduced by 2000, and that we are not given answers that really come from the Treasury? The right hon. Lady has specific responsibilities; will she use them to the utmost effect?

Clare Short: I assure the hon. Gentleman that my right hon. Friend the Chancellor of the Exchequer and I are working together in absolute agreement. We are determined to secure more speedy implementation of the highly indebted poor countries initiative. I agree that countries that are saddled with massive unpayable debts are set up to fail, because they cannot secure the resources with which to promote education, health and other aspects of human development.
We are strongly committed to backing good government. As I told the hon. Member for Macclesfield (Mr. Winterton), a Government who commit themselves to poverty reduction and improving health and education should then have the opportunity to have their debt written down to sustainable development, so that they can succeed and make progress. We are committed to securing the fastest possible progress.

European Court (Freezing of Aid)

Barbara Follett: If she will make a statement on her Department' s response to the European Court's freezing of some of the aid budget lines. [46866]

The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): My Treasury colleagues, who lead on this issue, have upheld the previous Government's decision to challenge European Union spending that had no legal base. The United Kingdom did not object to any budget line for assistance to developing countries, but the EU Commission decided to suspend future grants for those lines, while also reviewing the implications of the court's judgment. My hon. Friend the Economic Secretary to the Treasury agreed with the Commission and the European Parliament on 23 June that all new grants not disbarred by the judgment will proceed by mid-July.

Barbara Follett: I thank my hon. Friend for that reply. Will he do all that he can to ensure that such matters are resolved with the minimum of delay, particularly as regards budget lines relating to land mines and human rights? Will he also ensure that the European Parliament has some discretion over awarding sums to smaller bodies?

Mr. Foulkes: It was for that reason that my hon. Friend the Economic Secretary had her meeting. She wanted to ensure that those budget lines were reinstated, and that the money should be spent as quickly as possible. My hon. Friend the Member for Stevenage (Barbara Follett) will agree that the Government are right to ensure that effective control of public expenditure is treated as importantly in the European Union as it is in the United Kingdom.

Mr. John Townend: Have there been any proposals to freeze European or British aid to India and Pakistan on the basis that, as they can afford to develop nuclear weapons, they do not need aid?

Mr. Foulkes: We have given that point careful consideration. The Government have condemned the testing of nuclear weapons by India and Pakistan, but we are concerned that some of the poorest people in the world live in those two countries. We are working with non-governmental organisations, international organisations and state governments, as well as the two international Governments. Stopping our programmes would harm some of the poorest people in the world, and that is why we have decided to continue with bilateral assistance.

EU Aid Programme (Accountability)

Mrs. Teresa Gorman: What steps she will take to increase the accountability of the EU aid programme. [46868]

The Secretary of State for International Development (Clare Short): We worked during our presidency, which has just ended, to try to improve the effectiveness of European Union development assistance; Austria also intends to make that one of the priorities of its presidency. We are encouraged that DGVIII—the


directorate responsible for development in the Lomé countries in Africa, the Caribbean and the Pacific—has plans for a programme of reform. We welcome the improvements that have been made, but it is clear that further improvements are needed.

Mrs. Gorman: I thank the right hon. Lady for that reply. In September, the European Union will reopen negotiations with third-world countries on aid. The right hon. Lady will be aware of the Court of Auditors' report on the appalling waste of money that has been put into the third world, involving awful cock-ups over the dumping of EU produce. For example, the EU provided more than £2 million to improve Namibia's meat production and abattoirs, so that Namibia could supply South Africa. However, the EU was also dumping subsidised European beef on South African markets at half the price that Namibia could manage. In another South African example, 2,500 jobs were lost in canning factories in the Capetown area because of the dumping of subsidised European fruit. Given the right hon. Lady's frugal reputation regarding waste, displayed in her famous remark about "golden elephants", can she assure the House that she will ensure that such waste of our public funds will not be allowed to continue during her stewardship?

Clare Short: The hon. Lady is absolutely right to say that the Court of Auditors has published damning reports on the performance of EU development assistance. She is also right on her wider question about the highly subsidised common agricultural policy and the dumping of food in ways that damage and undermine agricultural production in developing countries. We need reform of the CAP. The next World Trade Organisation round of talks on the general agreement on tariffs and trade will also consider agricultural subsidy.
The September negotiations on the Lomé mandate relate to trade and development assistance for countries in Africa, the Caribbean and the Pacific. I assure the hon. Lady that the principles of efficiency in development, supporting good government and encouraging trade and self-reliance will be key to those negotiations.

Dr. Norman A. Godman: In addition to questions of accountability in the EU' s aid programme, there are serious questions about its administration. In the middle east recently, I heard representatives of non-governmental organisations complaining bitterly about cumbersome Brussels procedures for paying out desperately needed funds. Can my right hon. Friend do something to speed up those procedures?

Clare Short: My hon. Friend is right to say that the slowness is appalling. It is partly because of the exposure of misspent money which results in more and more checks being put into the system which becomes slower and more inefficient. That does not solve either problem. I assure him that we have made it a feature of our presidency to try to get improvements. We have secured some but there is much more to be done. We shall continue to work as hard as we can to get the biggest improvements that we can.

Dr. Jenny Tonge: I appreciate, and know of, the right hon. Lady's concern about

accountability of European Union aid and I know that she has often spoken about it to the International Development Select Committee. I want to ask about the accountability and efficiency of European aid for AIDS in developing countries. She knows that one in four—sometimes a higher proportion—of the population in the Great Lakes region of Africa are suffering from the AIDS epidemic and are HIV positive. Over the past 10 years, the European Union has spent £160 million on various projects to do with AIDS but very little on an AIDS vaccine. The medical world believes that an AIDS vaccine is the only answer to the AIDS epidemic. Will she address the accountability of expenditure and do something about the EU encouraging research on an AIDS vaccine?

Clare Short: I cannot tell the hon. Lady without notice about EU spending on AIDS and an AIDS vaccine. I shall write to her. I agree that the evidence is clear that an AIDS vaccine should be possible. We have contributed to that, as have other countries. It is an important thing to do and the long-term answer, but there are other answers. Prevention is working. In Uganda, a national education programme has slowed the rise in AIDS. In Tanzania, we did research that showed that, if venereal disease were treated early, the spread of AIDS was slowed. A lot can be done on prevention, but we must back the vaccine as well.

Mr. Stephen Timms: Given the encouragement of the recent prisoner releases in Nigeria, what prospect does my right hon. Friend see for normalising aid links between Nigeria and the EU, and, indeed, her Department?

Clare Short: My hon. Friend is right—there is a real opportunity in Nigeria. We must do all in our power to encourage the new Nigerian President to go for reform, democracy and proper protection of human rights. All of us are doing everything that we can to secure that aim. Up to now, aid spending has gone not through Government but through non-governmental organisations and local government. If Nigeria embraces reform, democracy and human rights, we shall be keen to work with the Nigerian Government to secure those reforms, which would be of enormous importance to the people of Nigeria and of the whole of Africa.

Mrs. Cheryl Gillan: On accountability, in response to my written question last week about the election in Togo, the Foreign Office deplored the harassment of election monitors, the confiscation of ballot boxes by the military, problems with the voter lists and polling cards and many other irregularities in the electoral process. In fact, it issued a declaration last month expressing concern. As Togo receives EU multilateral aid, would the Secretary of State say whether she also responded and what action, if any, she took during the presidency to attach conditions to the provision of aid to Togo?

Clare Short: I regret that I do not control EC spending on aid. I wish that I did, because I might then be able to bring about the improvements that the hon. Member for Billericay (Mrs. Gorman) called for. Without notice, I cannot speak with any authority on EC programmes in Togo. I shall find out what has been spent and write to the hon. Lady.

Palestine

Dr. Brian Iddon: If she will make a statement on the future budget of the UN Relief and Works Agency for Palestine Refugees in the Near East. [46869]

The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): Additional contributions announced recently, including an extra £1 million from the United Kingdom, substantially reduced the potential shortfall in funding for UNRWA's essential core budget this year. Donors have agreed with UNRWA to monitor the situation closely over the coming months, to support a process of financial and management reform in UNRWA and to work together to resolve longer-term funding problems.

Dr. Iddon: When a group of us visited a Palestinian refugee camp on the Gaza strip a few weeks ago, we detected a rise in tensions due to rumours that services might have to be cut because UNRWA had a £12 million budget deficit while the population of the camps had grown by almost 30 per cent. UNRWA is a stabilising force in the region. I am sure that my hon. Friend agrees with that. I congratulate the Government on increasing the budget by £2 million, but will my hon. Friend continue to apply the pressure on other donors at least to maintain the present situation, if not to increase the funding?

Mr. Foulkes: I was pleased to meet my hon. Friend and a number of our colleagues earlier this week to get a report on their visit. I was able to confirm to him and my colleagues, as I am able to confirm to the House, that we are fully committed to the work of UNRWA and the vital humanitarian role that it plays, but also to its reform and to making it more efficient. The United Kingdom has committed a total of £25 million to Palestine this year, including the Palestine Authority, and we are willing to consider what further we can do to help the people in Palestine.

Mr. Nicholas Soames: I warmly support the Minister's reply. Does he agree that there are opportunities for the know-how fund and the way in which it operates to be applied to the Palestinians, who have suffered such appalling treatment at the hands of the Israelis and are deeply deserving of our help?

Mr. Foulkes: What the hon. Gentleman says is wise. The know-how fund, as he knows, extends to the former Soviet Union and eastern Europe, but the methods are applicable elsewhere. We have considered helping Government institutions and the building up of capability in Palestine. I will certainly take further account of the recommendations and suggestions that the hon. Gentleman has made.

Sanction

Mr. Tam Dalyell: Pursuant to the answers of 10 December 1997, Official Report, column 615, and 16 March 1998, Official Report, column 454, what progress has been made in her plans to develop sanctions which hit elites rather than the mass of the people. [46870]

The Secretary of State for International Development (Clare Short): Work is being undertaken within Whitehall and we are working with other countries in the UN to ensure that future sanctions are as closely targeted as possible on offending regimes and that, when sanctions are agreed, appropriate humanitarian exemptions are included. I will, as I have promised, write to my hon. Friend when our review is complete.

Mr. Dalyell: Before there is another crisis in October or November in Iraq, will the Department and my right hon. Friend make inquiries about the behaviour of United Nations Special Commission personnel in Baghdad, information on which I have given to her Department?

Clare Short: I am grateful to my hon. Friend for informing me earlier today of the allegations about UNSCOM staff. I have checked with my officials, and we have no knowledge of any such behaviour, so I should be grateful if my hon. Friend would let me have as much information as he has. We will most certainly check it out. However, I have to say that the real answer to the suffering of the people of Iraq is for Saddam Hussein to cease manufacturing weapons of mass destruction. We must all do all that we can to bring that about as rapidly as we can.

Mr. John Bercow: Further to the hon. Gentleman's question, does the Secretary of State agree that, if a country's human rights record is bad, there is often a compelling case for shifting aid previously given to it to a neighbouring country in a similar income category in order conclusively to demonstrate that aid is linked to governance, respect for human rights and the concept of an ethical foreign policy?

Clare Short: I agree, as I said to the hon. Member for Macclesfield (Mr. Winterton), and we are keen to back Governments who have serious good intent to reduce poverty, which requires good governance, respect for human rights and successful models of development. When Governments do the right thing, they succeed, and the international community gets behind them. Then there is sustained and successful development. We cannot turn our back on people who live under bad Governments. We have to find other ways of bringing relief to them through non-governmental organisations, not through Governments. The hon. Gentleman is right. We must back good Governments and achieve success in development. In the other cases, we can bring relief, but we shall not achieve development where there is not good Governance.

Rev. Martin Smyth: I appreciate the concerns about looking after the poor. One of the arguments against the Jubilee 2000 campaign is that wiping out debt will increase the money for bad Governments, who will just take it. Are any steps being taken to mobilise world banking communities to watch out for money being invested in their banks that was sidetracked from aid by bad Governments?

Clare Short: The hon. Gentleman is right. There are conditions on debt relief in the HIPC initiative that Governments must have a good track record. That means that good Governments get debt relief and not bad Governments, who might spend the relief on more arms


or more prestige projects. The hon. Gentleman is also right in that the OECD is calling for a great tightening up by all our Governments and institutions on corruption. It calls on all our Governments to make it an offence to offer a bribe overseas to a public official. Banks do not deal with corrupt regimes. We back successful Governments and freeze out the unsuccessful so that we get a better world order.

Peace Corps

Mr. Austin Mitchell: If she will assess the advantages of establishing a Government—sponsored peace corps of young people to assist with aid work. [46871]

The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): We are encouraged by the numbers of young people who already take a great interest in development and we are seeking ways of engaging them further in development co-operation issues. However, developing countries require access to know-how rather than inexperienced volunteers. We provide such help through our own programmes and through our support for the four volunteer sending agencies, which have more 2,000 qualified volunteers overseas.

Mr. Mitchell: I hope that my hon. Friend will not rest satisfied with that answer but will look at the sustained success of the American peace corps, which every year sends abroad 6,500 young people with an average age of 29 to engage in English teaching, health, sanitation and development work in developing countries and even in eastern Europe. Could we not mobilise the commitment, enthusiasm and energy of our young people and perhaps even give them a remission on their student loans for going in exactly the same way and help developing countries at the same time?

Mr. Nicholas Winterton: There is VSO.

Mr. Foulkes: Voluntary Service Overseas, as the hon. Gentleman says, and the three other sending organisations already do that. I draw my hon. Friend's attention to another organisation, British Executive Service Overseas, BESO, which sends older, experienced volunteers overseas to offer their services. I am assured by the Government Chief Whip that, if my hon. Friend wishes to do that, he would not stand in his way.

Mr. Nigel Evans: The Minister mentions four organisations that do much good work with young people. Can he ensure that publicity for those organisations is increased? Ultraframe, a private business in Clitheroe in my constituency, is investing much of its own money in providing food aid in Sudan. Many other private companies wish to assist in that way, and perhaps if we could get more links between business and charitable aid organisations such as the ones that the Minister mentions, more young people could be assisted to go abroad to help in aid projects.

Mr. Foulkes: The hon. Gentleman makes a sensible suggestion. My right hon. Friend the Secretary of State

and I regularly meet the NGOs that are involved, and I specifically met the four volunteer sending organisations recently to discuss exactly the areas that the hon. Gentleman mentions, and also spoke about increasing the profile and participation of VSO and other voluntary service organisations.

Russia

Mr. David Watts: What assistance her Department is providing to Russia in the current financial year. [46872]

The Secretary of State for International Development (Clare Short): The know-how fund is the primary source of the United Kingdom's help to Russia and the former Soviet bloc countries that are making the transition to democracy and a market economy. In Russia and elsewhere, the know-how fund has a good reputation for providing fast and flexible assistance in support of reform. Given the worrying continuing growth in poverty in Russia, greater emphasis in future will be placed on assistance for the social, environmental and governance aspects of reform.

Mr. Watts: I thank the Minister for that reply. I agree that a great deal of benefit has been derived from the use of the know-how fund in helping Russia to reform its economy. However, is it not time to focus all our help in that area on dealing with poverty and the environmental problems that face the Russian people?

Clare Short: I agree with my hon. Friend. Of course, dealing with poverty partly means having an efficient economy that generates the wealth to care for people. We shall continue that aspect of the work, but we are shifting the focus to social reform. Too many people are falling through the system and Russian men have lost nearly 10 years of life expectancy since the fall of the old system. We are about to publish our Russia country strategy paper and that will give details of the way in which we intend to make that change.

Mr. David Atkinson: Will the right hon. Lady ensure that the aid and assistance to which she has just referred goes to the Russian people and does not end up being laundered by the Mafiosi, who are certainly part of the problem of the present Russian crisis?

Clare Short: The hon. Gentleman is right. The problems of corruption are great. The know-how fund does not go through Government; it goes direct to projects. It is tightly monitored and has a reputation for not getting embroiled in corruption in the way in which many other programmes do. Corruption is part of Russia's problem and it is hurting poor people in Russia.

Guatemala

Mr. Ian Bruce: If she will make a statement on the Government's assistance to street children projects in Guatemala. [46873]

The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): Although we have no direct development programme in Guatemala, we provide assistance for street children through the joint funding scheme that supports NGOs that work with street children, and through our contributions to the European Commission's programme.

Mr. Bruce: I thank the hon. Gentleman for that reply and remind him of the excellent work that my constituent Bruce Harris does with Casa Alianza in Guatemala. Will the hon. Gentleman's Department look particularly at indirect aid to try to get law and order sorted out in countries such as Guatemala, because street children are being persecuted by quasi-judicial organisations and people are not being punished by the courts there, and that causes even more problems?

Mr. Foulkes: We do financially support Casa Alianza and our contribution to the European Commission's programme is £23 million, a not insubstantial amount. We are working in Brazil, Ecuador, Kenya, India, South Africa and many other countries with street children. I am sure that the hon. Gentleman will agree that that is a significant contribution by the British Government.

Oral Answers to Questions — PRIME MINISTER

The Prime Minister was asked—

Engagements

Mr. Lindsay Hoyle: If he will list his official engagements for Wednesday 1 July.

The Prime Minister (Mr. Tony Blair): This morning, I had meetings with ministerial colleagues and others and will have further such meetings later today.

Mr. Hoyle: Will my right hon. Friend congratulate Royal Ordnance's land mine clearance unit, which is in my constituency, on its good work and on all the good work that it has done in Angola, Mozambique, Kuwait and many other countries, especially with today being the birthday of the late Princess Diana? Would that not be the golden opportunity for us to ratify the Ottawa convention as quickly as possible?

The Prime Minister: I am glad to pay tribute to the mine clearance team of Royal Ordnance, and I know that everyone in the House will agree with that. We have already achieved much in advance of ratification of the treaty. The export ban and moratorium on use were put in place within three weeks of taking office. The United Kingdom stockpiles have been destroyed—450,000 mines, almost half our stocks, have already been destroyed—and we have already announced the doubling of aid funding for de-mining activities overseas. However, I can announce today also that we intend to publish a Bill

next week to ratify the convention and, if legislation is completed in July, as we wish it to be, we will be among the first 40 nations to ratify, as indeed we promised to do.

Mr. Peter Lilley: Will the Prime Minister overrule his Foreign Secretary and allow Foreign Office officials to answer questions from the Foreign Affairs Select Committee?

The Prime Minister: No. I think that the Foreign Secretary is entirely right.

Mr. Lilley: The Prime Minister may affect to be unconcerned by this, but it is not just the Opposition who are concerned. This morning, the Labour Chairman of the Foreign Affairs Select Committee said that the constitutional point is that
No Government should be able to set up a departmental inquiry and thereby hope to fend off any questioning.
Is not the truth that that is precisely what his Government are attempting to do?

The Prime Minister: No. I do not accept that that is what we are doing at all. The code of practice on access to Government information, which was published by the Conservative Government, says in respect of information that should remain confidential:
information whose disclosure could prejudice…the proceedings of any tribunal, public inquiry or other formal investigations…whose disclosure is…likely to be addressed in the context of such proceedings."
Therefore, what we are doing is entirely in accordance with that code of practice and, as the inquiry is going to report within the next three or four weeks, I do not think that it is unreasonable to say that we should await its outcome.

Mr. Lilley: Is this not just another example of the contempt that the Government have for the House? Are they not a Government who make announcements outside the House, bypassing Parliament; who change the rules of Prime Minister's questions without consultation; and who now want to use inquiries behind closed doors to block scrutiny by Select Committees? Why is the Prime Minister riding roughshod over the unanimous opinion of 21 Chairmen of Select Committees? Is it not time that he listened to them and allowed Parliament to do its job?

The Prime Minister: No; and I am sure that the right hon. Gentleman would have read out that question irrespective of the answer that I gave him—[Interruption.] I read out the reasons for our decision from the code of practice on access to Government information. I do not think that it is at all unreasonable to say that we should wait three or four weeks. Furthermore, the right hon. Gentleman will know that the Foreign Secretary offered to allow the Foreign Affairs Select Committee to look at the telegrams, provided that confidentiality was respected. That offer was turned down. In those circumstances, I do not think that the Foreign Secretary or the Government have acted unreasonably.

Mr. Steve McCabe: Will the Prime Minister comment on reports of the shooting of civilians by members of the Indonesian security services accompanying the British ambassador and European


Union envoys on their recent visit to East Timor? What implications might the shootings have for future British and European policy towards Indonesia and East Timor?

The Prime Minister: We are pressing the Indonesian authorities to ensure that there is a full investigation of the incident. We obviously regret very much the death of the demonstrator. We have also said that we want to ensure that local leaders are involved fully in the investigation. The incident makes a search for a solution to the status of East Timor all the more urgent. Our ambassador, with his Austrian and Luxembourg counterparts, has just visited as part of the European Union troika visit. Moreover, the Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Leeds, Central (Mr. Fatchett), will shortly be meeting United Nations representatives in New York to re-emphasise our support for the UN process, which we hope will be successful.

Mr. Paddy Ashdown: Does the Prime Minister agree that the crisis in Kosovo has deepened dangerously in the past few days and now threatens to widen? Does he also agree that what is now needed is firm international action—which, despite the robust attitude of Britain and the United States, so far has not been forthcoming—and that, once again, the world is in danger of doing too little, too late?

The Prime Minister: I agree that that is a danger, which is precisely why we have been acting as we have. We hope that, over the next few days, there will be the right mixture of political and diplomatic initiatives. However, the North Atlantic Treaty Organisation continues to review all options for military action, which we have not ruled out. I go further than that and say that we are prepared to use those options should political and diplomatic efforts fail.

Mr. Ashdown: Reviewing all options is what the Prime Minister was doing two weeks ago—three weeks ago. The situation has now become much worse. Will the Prime Minister agree now to two actions: first, that the international community—if we are to regain control of the situation—should put down its own firm plans for a solution in Kosovo, based on Kosovo' s autonomy within the Federal Republic of Yugoslavia; and, secondly, that, although a United Nations Security Council resolution on the use of force is of course desirable, the necessity of a resolution will depend on the urgency of the situation and circumstances on the ground?

The Prime Minister: In respect of the plan, that is exactly what we are considering. The right hon. Gentleman is right to say that, two weeks ago, I told him that we were reviewing all options. However, it is not as if nothing has happened between then and today. There have been intensive efforts—particularly by the United States, but also by Britain as president of the European Union—to find the right type of political and diplomatic initiative that works. Everyone understands that, if we use military action, it will be in a situation that is fraught with great danger and difficulty. As a matter of common sense, we must therefore make every effort we can to reach a political solution.
In respect of the second point, we shall of course ensure that we have a proper legal base for any action that we take. However, all options remain available to us. I agree with the right hon. Gentleman that the situation is getting worse—which is why political and diplomatic efforts have, if anything, been redoubled in the past few days. Nevertheless, I do not think that we are wise to act until those political and diplomatic efforts have been exhausted. However, as I said, all military options remain available, and we will not hesitate to use them if it is necessary to do so.

Helen Jackson: Will the Prime Minister join me in expressing concern about the extremely large bonuses that the directors of Yorkshire Water have recently awarded themselves? Does he agree that they and the regulators have a public responsibility, which obviously goes wider than their first job of providing us all with a good, clean water supply?

The Prime Minister: They do have that responsibility, and I hope that they discharge it. One of the reasons why my right hon. Friend the Secretary of State for Trade and Industry published her Green Paper "A Fair Deal for Consumers" was precisely the public concern about these very large bonuses and pay increases. We are all happy if these things are earned, but, particularly when monopoly services are involved, it is important that the interests of the consumer and the public genuinely come first.

Mr. Julian Brazier: Before the election, the Prime Minister said:
The values of a Decent Society are the values of a strong family unit".
Does he believe that marriage is important for strong family units and, in particular, does he believe that the Government's tax and benefit policies have any role at all in promoting marriage?

The Prime Minister: I would answer yes to both those questions. Yes, I certainly believe that marriage is an important part of any stable, well-functioning society. It is precisely because we believe that and believe in the importance of family life that we are trying to introduce tax and benefit reforms that help it. In particular, it is one of the reasons why we believe, for example, in the working families tax credit, which helps low-income families, and in parental leave, which helps families juggle the responsibilities of work and family life. I only wish that the hon. Gentleman's party supported both those measures.

Mr. David Crausby: In 1998, we celebrate two important political anniversaries. The first, of course, is that of the national health service, founded 50 years ago by a Labour Government. The second is that of value added tax, established 25 years ago by a Conservative Government. Will my right hon. Friend consider setting up a focus group to determine which of those events commands the most affection?

The Prime Minister: We have not yet received a request from the official Opposition for a celebration to mark the introduction of VAT, but we will give it a sympathetic hearing if such a request is made. Of course,


it is precisely because we believe in a fairer tax system that one of the first acts of this Government, as promised, was to cut VAT on fuel.

Mr. Alan Duncan: Whenever a paedophile ex-offender is found somewhere to be housed and is then hounded out of town by a lynch mob, there is a very grave danger that such a person will exercise his technical freedom and end up doing unspeakable things to children in someone else's backyard. My constituents in Rutland have shown admirable restraint since learning that they might have Robert Oliver in their midst.
This is not an easy decision for anyone, and I thank the Home Secretary and his Minister for the way in which they have handled this matter with me. I will not lead a lynch mob, whatever the personal or political cost to me, and nor would the right hon. Member for Yeovil (Mr. Ashdown). However, does the Prime Minister accept that the tolerance and trust of my constituents are near breaking point? Will he give me an assurance that, if they do what many other people in this country would not do, and exercise their civic duty by taking this man, the institution, Wing Grange, into which he is put could then revert to its former use as a rehabilitation centre for low-risk offenders only?

The Prime Minister: I am grateful to the hon. Gentleman for the responsible attitude that he has taken in this matter and to his constituents for the restraint that they have shown. I fully understand, as do all hon. Members, the concern at the prospect of having a paedophile housed in the local community, especially in a rural area such as Rutland.
On the future role of Wing Grange, the essential point is that no released offenders will at any time be housed at Wing Grange or anywhere else if they present a risk to the public that cannot be contained. Such arrangements will be kept under constant review. Much depends on the response of the individuals concerned, but perhaps I can give the hon. Gentleman the assurance that, in any event, there is no question of groups of paedophiles being housed together at Wing Grange, nor of any one paedophile being housed there indefinitely. I can further assure him that Wing Grange will take only offenders whose risk can be properly managed there now and in future.
I thank the hon. Gentleman again for the attitude that he has taken. It is an immensely difficult situation because, wherever such people go, there is bound to be an outcry in the constituency concerned. The way in which the hon. Gentleman and his constituents have handled the matter does them great credit.

Mr. John McDonnell: Has my right hon. Friend any last-minute appeal to those members of the Orange Order who are threatening to force their way along the Garvaghy road this weekend? If the march is part of an act of religious worship, surely the God they seek to worship would rather the march were in an isolated field than risk any further harm to a community that has endured so much.

The Prime Minister: This is obviously an extremely fraught situation. We shall do everything we can to bring

it to a proper conclusion. Of course the rule of law must always be upheld. A whole series of procedures has to be gone through, but I very much hope that people on both sides can see that, in the new era that could happen in Northern Ireland, it is in their interests to make sure that it does and that all the problems and tensions are reduced so far as is humanly possible.

Mr. Peter Lille: A week ago, the Prime Minister stood at the Dispatch Box and told the House that the number of English students applying to Scottish universities was up. Before tonight's debate on the subject, will he set the record straight and admit that what he said was the reverse of the truth?

The Prime Minister: I will set the record straight. The number of English applicants as a proportion of the total has indeed risen, and indeed the number of English entrants to Scottish universities is also set to rise, but it is true that, overall, for all Scottish education, there has been a fall.

Mr. Lilley: I asked the Prime Minister a straightforward question about the figures. Why could he not give a straightforward answer and admit that he was wrong? After all, the Prime Minister is not the Paymaster General. He cannot publish one figure in the official documents and then declare a different one to the House. Is it not time that he admitted that his policy has caused a decline and that what he said to the House last week was factually incorrect?

The Prime Minister: I have actually corrected what I said to the House last week, but what the right hon. Gentleman is saying—that the reason for the fall is the Government's policy—is wrong, because the actual proportion of English applicants to the total has risen, not fallen. If the right hon. Gentleman were right and the policy had caused a fall, one would expect the opposite to be the case, but it is not.

Mr. Lilley: The Prime Minister is reluctant to admit that he was misleading the House, but he got his facts wrong last week and he has got his policy wrong tonight. It is nonsense to make students from England, Wales and Northern Ireland applying to Scottish universities pay more in tuition fees than students from Germany, France and Spain. The universities have said that it is nonsense; the students have said that it is nonsense; all parties in the House have said that it is nonsense; the House of Lords has said that it is nonsense and the Prime Minister knows that the majority of Labour Members believe that it is nonsense. Is it not time that the Prime Minister was big enough to accept that he has made a mistake and change the policy before tonight's vote?

The Prime Minister: No. The reason for the policy, as I have explained several times, is that in Scotland there are normally four-year courses because students have highers rather than A-levels, so students go to university earlier. In England, courses are three years.
The right hon. Gentleman says that no one supports our policy. The Dearing committee recommendation was that Scottish students should not pay tuition fees in their fourth year at university because it is a different education system. If we did what the right hon. Gentleman and


others want and granted four-year courses all the exemption from tuition fees, we would have to do that for the whole United Kingdom. The bill for that would be £27 million. That money would have to be taken out of higher education.
As a result of the changes that we are making in student finance, we shall get more students into university, we shall get more resources into front-line education and the cap on student numbers, which was introduced by the Conservative Government and means that no more than 30 per cent. of school leavers in the UK can ever go to university, can be lifted. That is why I accept that it is a tough and difficult decision, but it is the right one.

Jane Griffiths: Does my right hon. Friend recall that the Tories campaigned in support of poverty pay by fighting to try to stop the Government's National Minimum Wage Bill? Does he hope, as I do, that the Tories will, for once, stick to their principles, and at the next election we shall campaign on having brought in a minimum wage—

Madam Speaker: Order. I must remind the hon. Lady and the House that the Prime Minister is responsible only for his Government's policies, not for the activities of the Opposition. If she could rephrase her question in some way, of course I will hear it. I am sure that the Prime Minister is already forming an answer in which he will enunciate his responsibility in terms of policy on these matters.
Ms Griffiths, this is your first question at Prime Minister's Question Time. Could you rephrase it in some way so that it is about matters for which the Prime Minister is responsible?

Jane Griffiths: Thank you, Madam Speaker. I stand corrected.
Does my right hon. Friend agree that if the Conservative party—[Interruption.] Will my right hon. Friend confirm that our policy is to support the poorest workers in this country?

Madam Speaker: Well done, that girl. Well done.

The Prime Minister: My hon. Friend is right. The Government will continue to support the minimum wage. We look forward to hearing a position from the Conservative party.

Mr. Mark Oaten: Is the Prime Minister aware that his health advisory group has warned that, unless the number of medical students increases by about 1,000 a year, the national health service will be out of doctors by 2010? Is he concerned that the number of applications to study medicine is falling and that the number of doctors leaving the NHS is rising? What will he do about that?

The Prime Minister: That is precisely one of the issues that is being addressed by the comprehensive spending review. We shall announce the results shortly. The hon. Gentleman will know that medical students are exempt from the new provisions on student finance. This is about how to get more resources into the national health

service. We have got more money in already, but I agree that we need to do more. That is what we shall be announcing in the next few weeks.

Ms Margaret Moran: Will my right hon. Friend join me in congratulating all those who signed an innovative leasing deal this week which will bring £170 million of private investment and 4,500 jobs to Luton airport? The deal will keep the airport in public ownership, despite all the efforts of the previous Government to privatise it. Will my right hon. Friend look for ways of extending such public-private finance arrangements to other areas of the public sector that desperately need investment? When he is next asked whether he has wafted in from paradise, as I am sure that he often is, will he be able to answer honestly, "No, Luton airport"?

The Prime Minister: I am delighted at the news that my hon. Friend has announced. I pay tribute to the work that she has done in promoting the deal. I believe that partnership between public and private sectors is far the best way to go for such institutions. It gives them a far better future than the dogma of privatisation on which the previous Government insisted.

Mr. John Greenway: Will the Prime Minister find time to visit Kirkbymoorside in North Yorkshire to explain to the work force of Slingsby Aviation Ltd., many of whom have been made redundant this week, why the award-winning Firefly training aircraft, which is used by air forces throughout the world, including our own Royal Air Force and the United States of America air force, was not chosen to replace the aging Bulldog aircraft and lost out to an untried German alternative? We know that such decisions are not easy, but does he understand the anger of the local community, who question what sort of Government would put skilled British workers on the dole and export their jobs to Germany?

The Prime Minister: In respect of the last part of the hon. Gentleman's question, I simply point out that the Government whom he supported put rather a lot of skilled workers on the dole. The hon. Gentleman is right in saying that such decisions are difficult. They are taken on objective commercial advice; we have to try to get the best deal. I shall write to him and set out in detail the reasons for the decision.
I understand the concerns of the work force; of course we are worried about that. All such things were considered extremely carefully before the decision was made. We will do all that we can to help with the problems that the company is experiencing.

Ms Beverley Hughes: Is my right hon. Friend aware that Aneurin Bevan launched the national health service from the now Trafford general hospital in my constituency and that, 50 years on, on 5 July, another Labour Secretary of State will visit the hospital and help to celebrate that achievement? Will my right hon. Friend join me in thanking the staff at that hospital and throughout the NHS for helping to sustain the NHS during those years, particularly the past 18 years of attacks by previous Governments? Will he assure my


constituents that this Government have a deep commitment to a modern, excellent health service, which is available freely to everyone?

The Prime Minister: It was the proudest achievement of the Labour Government after the war to found the national health service in the teeth of Conservative party opposition. It will be our job as a new Labour Government to rebuild the NHS by securing both the investment and the reforms that it needs, so that we get a better service, delivered at good value for money, and maintain the principle of the NHS, opposed by the Conservatives, which allows people access to high-quality care, irrespective of their wealth.

Sir Archie Hamilton: Why has the Prime Minister spent so much time trying to define the third way? Were not 18 years in opposition long enough for the Labour party to produce a new political philosophy?

The Prime Minister: Actually, we did that. In case the right hon. Gentleman did not notice, it was quite successful last May.

Mr. Peter L. Pike: The Prime Minister will know that, on 1 May last year, Burnley and towns throughout the country inherited major public and private sector housing problems as a result of 18 years of neglect by the previous Tory Government. The Labour Government have started to tackle those problems by allowing the use of capital receipts. What further steps do the Government propose to take to enable us to solve the problems and provide people with decent housing as we approach the 21st century?

The Prime Minister: I pay tribute to my hon. Friend's work in this field. In defiance of the Conservatives, we have made available an extra £900 million through the release of capital receipts. More than 50,000 new social

lettings have been created in 1998–99. However, we want to do more, because it is important to provide investment, particularly for some of the worst aspects of the inner city, where we need better modern housing, jobs, better schools and better hospitals. That is precisely why we have embarked on an investment programme that will allow all areas of our country to have the future that they need and deserve.

Mr. Andrew Lansley: Is the Prime Minister aware that, on Monday, a Dun and Bradstreet survey reported a 48 per cent. increase in the number of business failures in the eastern region of England compared to the last quarter? Does the Prime Minister understand that, while the Government sit complacently, the higher pound, higher interest rates and higher business taxes are hitting businesses and they are paying the price? He said that things could only get better, but they have got worse.

The Prime Minister: I do not accept that at all. We have made the decisions necessary to control inflation, which is important, and to get rid of the large budget deficit that we inherited from the previous Government. We made those decisions because, the last time a Government were confronted with such a situation—in the late 1980s and early 1990s—they failed to make the right decisions.

Mr. Lansley: Nonsense.

The Prime Minister: The hon. Gentleman says that it is nonsense, but in the early 1990s, we had interest rates of 15 per cent. and record numbers of repossessions, we lost 1 million manufacturing jobs and manufacturing output fell by 7 per cent. Those were the days of Tory boom and bust. That was the legacy of the Government whom the hon. Gentleman supported. We shall not go back to those days. People remember them. They know what the Conservative Government did, they know what that meant to our public services, and they will never repeat that mistake.

Dawson International (Redundancies)

Mr. Archy Kirkwood: (by private notice): To ask the Secretary of State for Scotland if he will make a statement on the 720 redundancies announced yesterday by Dawson International Ltd. and the Government's plans to support the economy of the central Borders.

The Secretary of State for Scotland (Mr. Donald Dewar): I can well understand why the hon. Gentleman put down this private notice question. I have every sympathy with him and other hon. Members in the areas affected, and with their constituents. I recognise and understand the seriousness of the position. This is indeed bad news, although problems had been expected since Dawson announced its financial results some time ago. The news follows disappointing information about Viasystems, the printed circuit board manufacturers at Selkirk, where 200 redundancies were announced in May.
Although the unemployment rate in the Borders has been lower than that in the rest of Scotland for some years, there is no doubt that the Borders economy is heavily dependent on the textile industry, and these announcements have come as a particularly heavy blow.
I share the desire of many in the area to see the Borders economy diversify and modernise. The local enterprise company, Scottish Borders Enterprise, is at the heart of that effort, working with the local authority and other partners. Scottish Borders Enterprise has a budget of some £8.2 million in the current year, which, in per capita terms, is a comparatively generous allocation.
An extra £500,000 was added last year in recognition of problems in Hawick, which was appreciated in a tight and difficult year. The area was designated as a 5b area under European structural funds, with a programme worth around £21 million between 1994 and 1999. That makes it eligible for a whole range of grants to help to develop economic diversity.
I want to stress that the Government stand ready to play their part in further economic development plans for the area. My hon. Friend the Minister for Education and Industry, Scottish Office, has been discussing the situation in the Borders with the hon. Gentleman and others. He will visit the Borders tomorrow to continue those discussions with the economic development agencies, the local authority and, indeed, the public.
As the hon. Gentleman knows, my hon. Friend was especially anxious to have contact with the public, and he volunteered for what might be seen as quite a difficult engagement. He will listen carefully to what I hope and expect will be constructive proposals for the future of the Borders economy, but I am sure that the hon. Gentleman would not expect me to anticipate that at the moment.
I cannot pretend to the hon. Gentleman or to the House that problems such as these can be solved overnight—indeed, it would be irresponsible to do so. However, my hon. Friend the Minister of State and the Government will respond positively in the course of discussions tomorrow, and ensure that the House is informed of any further developments.

Mr. Kirkwood: I am grateful for that answer. I acknowledge the work that has already been done by

the Minister for Education and Industry, and we look forward to his visit tomorrow. However, does the Secretary of State understand that the scale of the redundancies—720 job losses, in contrast with what the Prime Minister has just been saying, in prime manufacturing, full-time, knitwear jobs—is a shock to the whole economy of south-east Scotland? The most recent estimate I have been able to get, with the assistance of the Library of the House of Commons, is that £6.5 million of purchasing power will be taken out of the central Borders economy, starting in August. That is a severe blow, which needs an urgent response.
The Minister for Education and Industry has been doing what he can, and we look forward to what might flow from his visit tomorrow, but it will take more than the Scottish Office Education and Industry Department to attend to this matter. Will the Secretary of State give the House an undertaking that he will involve local government Ministers and farming Ministers at the Scottish Office, and take a broader look at the whole Borders economy after the Minister for Education and Industry returns from his visit?
This is far and away the biggest economic blow that the region has suffered in living memory, and, if the Secretary of State does not take urgent steps to stem the haemorrhage of economic activity, the future for the Scottish Borders economy is extremely bleak indeed.

Mr. Dewar: I very much hope that the future is not bleak—I think that the Borders region has many advantages and many strengths, and we want to build on them. I entirely accept that the decision by Dawson's to shed 720 jobs is a real and significant blow. As the hon. Gentleman knows, 280 are in Berwick, but the whole area will suffer from this sad event.
The firm has major trading links with the far east, and perhaps some instability has resulted from that, but it is clear there have been long-standing problems in the textile industry of the Borders for some time. Ministers have talked to Mr. Finlay, the chairman of Dawson's, about the situation. We have made clear our anxiety to help if specific requests and proposals are made, although they would have to be considered on their merits. Dawson's still employs 1,500 people in the Borders, so it is still an important employer. Its redevelopment and restructuring, and its future success, are matters in which we all have a stake, and we have that very much in mind.
I accept that we have to look in a broad way at the problems of the area, and that that does not involve only one department of the Scottish Office. I have made it clear that we want to play our part, and implicit in that is that we are prepared to look in a broad sense at what strategic advances can be made and what can be done to help. However, it will not be a matter of an instant solution to what is a serious problem.

Mr. Dennis Canavan: Is my right hon. Friend aware that concern about the redundancies is not confined to the Opposition Benches? I fully understand the deep concern felt within the Borders community and by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) about the devastating effect that the redundancies will have in the region.
Is my right hon. Friend aware that, only a few months ago, there were several hundred redundancies at the Wrangler jeans factory in Camelon in my constituency?


There seems to be a common complaint in the textiles and clothing industries that part of the problem is the pound being too strong. Will my right hon. Friend have a word with the Chancellor of the Exchequer to try to bring about a situation in which the textile and clothing industries in Scotland can be more competitive?

Mr. Dewar: I accept that concern about the situation is widespread. I made it clear that it was shared by the Government, as I am sure it is by many of my right hon. and hon. Friends on the Benches behind me. I assure my hon. Friend that we take the matter seriously. Textiles is a particularly difficult sector at the moment. While other parts of the Scottish economy are doing well and flourishing, that sector certainly has its problems, which are not easy of solution, but we are prepared to consider anything that can be done.
On the pound, self-evidently a good deal of the increase in its value was completed more than a year ago, and, in fairness, a collapsing pound might be a more embarrassing problem than a strong one. For Scottish and, indeed, United Kingdom industry, above all we want stability, sustainable growth and low inflation. We want to ensure that we do not return to boom and bust and the stop-go cycles of the past. The Government are achieving all those aims to a fair measure, and they are important aspects of our economic policy.

Dr. Liam Fox: To understand the impact that the job losses will have in Hawick, Jedburgh, Galashiels and Selkirk, the House must understand how heavily reliant that area is on textiles. Also, it is worth noting that there are job losses on both sides of the border, and that any help will have to be on a United Kingdom-wide basis.
The greatest help that the Secretary of State could give, if he wants to help, would be to ask the Treasury to change its economic policy. We have an overvalued pound, rising interest rates, rising mortgage rates, a manufacturing recession, falling exports, a huge balance of payments deficit, and, now, rising unemployment. Are the Secretary of State and the Prime Minister living in some sort of economic wonderland—do they not understand the realities of what is going on out there? Under this Chancellor of the Exchequer and this Prime Minister, Labour is bad for business, and if the Secretary of State is correct and the Government are avoiding the boom and bust cycle, it is only because we are going to get the bust without the boom.

Mr. Dewar: That is a somewhat excitable summary from the Opposition—or I hope it is. Of course we recognise that there is a downside to the strong upside of stability and sustainable growth that we are trying to achieve. Dawson's has talked directly to the Treasury about the matter, and I think that my hon. Friend the Economic Secretary met the company recently to discuss it, so the Treasury is well aware of those points. The hon. Gentleman's line was a convenient one to take, particularly in these unfortunate circumstances. I do not think that the views he has expressed would be shared widely throughout industry—certainly not in the form in which he put them.

Ms Rachel Squire: First I must tell the hon. Member for Roxburgh and Berwickshire

(Mr. Kirkwood) and the hundreds of men and women and their families who are facing redundancy that I am confident that they have the deep sympathy of the people of Dunfermline, where at one time 6,000 people were employed in the textile industry—now, it is only 120. As my hon. Friends will be aware, we have also lost thousands of jobs in other traditional industries in the past few years, and recently our hopes were dashed by Hyundai mothballing its development.
Does my right hon. Friend agree that, in such depressing circumstances, it is vital that all sections of the community work together, and that there is a strong public and private partnership at local and national level to overcome the problems and bring some hope to the community that things can improve?

Mr. Dewar: Of course I recognise that; it is a difficult situation, as I said. It is unusual, because the unemployment rate in the Borders is around or just under 4 per cent., so, superficially, it does not seem to be a particularly hard-hit area, but I recognise that the figures can be misleading. I mention that fact as a corrective against despair for the future.
I accept that all parts of the community must come together. I was, for totally unconnected reasons, in the Borders only a week or two ago, when I had the opportunity—very briefly—to meet some of the local political representatives and the local enterprise company. My Department has been in fairly constant touch with them over the past few worried weeks, and we want to play our part, as I said, and take account not only of a narrow spectrum of Borders opinion, but of the community as a whole.

Mr. Michael Moore: I welcome the Secretary of State's acknowledgment of the problems in the Borders, especially as yesterday's hammer blow to the local economy follows a series of grim announcements in the past few months and years. He mentioned an increase in funding for the local enterprise company, but will he acknowledge that that merely reinstated the previous year's cut, which was imposed by the previous Administration? Does he accept that the low unemployment rate is a result of the fact that, when there are so few opportunities for other jobs, people leave—they do not hang around to be unemployed in the Borders?
Does the Secretary of State seriously believe that the Government's economic policy, particularly on the exchange rate—I welcome the fact that the Economic Secretary to the Treasury is in the Chamber—is sustainable? If Government policy does not change, there will be more job losses, not only in the knitwear industry but across Scottish and, indeed, United Kingdom manufacturing.

Mr. Dewar: I understand the hon. Gentleman's points, and I do not want simply to repeat what I have said, but we believe that certainty and stability are extremely important, particularly for those who trade across exchange rates. We also believe that sustainable growth is a major prize, and that low inflation is enormously important not only to industry, but to the community as a whole. We would not follow our economic policy if we did not think it sustainable. I appreciate that, in almost all economic circumstances, there is likely to be a less easy outcome for some—a balance must always be struck.
The £8.2 million given to Scottish Borders Enterprise is not, in per capita terms—I accept that that is only one measurement—out of line with moneys given in the rest of Scotland; indeed, it is probably above average. As I mentioned, we tried—modestly—with the additional £500,000 to recognise some of the problems that had arisen in Hawick. We are not inflexible, but obviously our budget is not unlimited—we must be certain that we are responding to practical aims, and solutions to what we accept are general problems. If such practical solutions and ways forward are charted in the discussions that I know will take place, we shall certainly do what we can to respond to them.

Mr. John Home Robertson: The news is indeed desperate for the Scottish Borders and all surrounding areas. Will my right hon. Friend do everything to ensure that Dawson's and public agencies take all possible steps to look after the people who are facing redundancy, and their communities? Will he take this opportunity to comment on the conspicuous failure of the industry to develop, let alone maintain, the market for high-quality knitwear products? Will he urge all agencies to concentrate on whatever scope there is for developing the potential of the high-quality, high-skill sector of the Scottish textile industry?

Mr. Dewar: I have made it clear that the Scottish Office believes, as I certainly do, that there is a future for textiles. We accept that things are difficult, and that there have been pressures both at the top and, for rather different reasons, at the bottom of the market. I am conscious of the difficulties that Dawson's has suffered, as anyone who has read the financial pages recently will be. The company is attempting to restructure and to refocus. As it is, even after these events, a very important employer in the Borders, it is obviously in our interests that it should succeed—and be helped if at all possible—in doing so.
It is also important—I think that there is unanimity on this—that we look beyond the one sector facing these problems, and try to diversify and broaden the range of economic activity in the Borders. It may be a small beginning, but BT's upgrading of its infrastructure in the area will, I hope, pay dividends in the longer term. We must look for such developments on which we can build and from which, we hope, we can get back the rather broader base that we all want.

Mr. Robert Maclennan: Does the Secretary of State recognise that the textile industry generally, and not only a particular company in the Borders, is facing a period not of stability, to which he would aspire, but of collapse, and that tens of thousands of jobs are threatened? People will take no comfort from reading today that the purchasers manufacturing index shows a record fall over two years. The Government's policy on exchange rates is widely considered to be a major contributory factor.
Will the Secretary of State exercise his influence in the Government to seek to rectify the problems that have arisen from their uncertainties about the future of sterling

and its relation to the euro, and recognise that it was a mistake to put taxation on businesses instead of on consumers?

Mr. Dewar: I do not accept that analysis, and I would dispute many of the right hon. Gentleman's assumptions. I remind him that the latest exports survey from the Scottish Council for Development and Industry shows a slightly improved performance in the textile sector for the first quarter of this year, which does not encourage total doom and gloom about the industry's future, although I freely concede that there are substantial difficulties.
We need to pursue an economic policy that is in the interests of the economy as a whole. We must recognise that the textile industry, with its heavy connection with the far east, has had a particularly difficult time. That is why we are talking about diversification, and considering a way forward. The right hon. Gentleman's criticisms are not justified and will not hold water.

Mr. Ian Davidson: As one of only a couple of Labour Members who were born and brought up in the Borders, I urge my right hon. Friend to take into account the enormous cultural and social impact of the textile and knitwear industry on that part of Scotland. It is a matter not only of jobs but of the way in which the area identifies itself to the outside world.
The Borders area is a relatively threatened habitat in cultural and social terms. I would certainly not want it to become merely a commuter suburb of Edinburgh, so I hope that my right hon. Friend can not only bring in other jobs but try to preserve the cultural habitat that is the Scottish textile industry.

Mr. Dewar: I am not sure that people would appreciate the term "cultural habitat"—it sounds somewhat off-putting—but I accept entirely the point about the individual character of the Borders. Perhaps I should confess, although that may not be the right word, that, when I was younger, I lived for a period in the Borders, just outside Hawick—but I do not want to blame Hawick for anything—and I greatly appreciate the charm and the quality of life offered by the area. We are trying to ensure that there is an economic infrastructure to support the communities and allow them to flourish. I think that everyone in the House is united on that.

Mr. Andrew Welsh: Has the Secretary of State read the latest Bank of Scotland survey of manufacturing and service industries, which shows that the problems experienced by Dawson International are being repeated throughout the 300 companies surveyed? What steps is he taking on interest rates and the strong pound, and to repair the damage done to the Borders and other regional economies?

Mr. Dewar: I have already tried to answer that question, but obviously not to the hon. Gentleman's satisfaction. It is important to have a stable economic framework within which industry and commerce can operate. Low inflation is certainly important, although there is a tendency for people to pick on one indicator and ignore all others, when there is often a trade-off for a change in policy.
Sustainable growth is also important, to allow people to plan ahead, whether they are selling overseas or in the British market, which is so important to most industries in Scotland. It is not helpful to pick one indicator in isolation and say that we should change it, without concentrating on the overall pattern of the outcome of economic policy.

Dr. Norman A. Godman: All Labour Members sympathise with the constituents of Members from the Borders, especially those who now face the breadline. May I remind them, however, that no Labour Member has been able to avoid this kind of thing? Thousands of jobs have slipped away from Inverclyde, because of the decline of the shipbuilding industry. My right hon. Friend the Secretary of State is right: there are no easy and quick solutions. That is why we can do without excitable outbursts from the so-called official Opposition spokesman.
May I tell my right hon. Friend, however, that Scottish Enterprise—and, indeed, local enterprise companies—must do much more to help indigenous industries and companies to prosper? Inward investment is important, but let us try to look after our own companies and industries, and let us try to avoid the traditional Scottish response to employment—migration, to which the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) referred.

Mr. Dewar: I think I can assure my hon. Friend—I suspect that I can speak for Scottish Borders Enterprise as well—that that organisation is extremely anxious to encourage the growth of small businesses, and existing businesses, in the area. I mentioned its own funding; I also mentioned European structural funds under heading 5b, which have generated significant additional money in the Borders. All these matters will be considered, but we are particularly anxious to see growth and stability within our boundaries as a result of our own efforts.
It is a cliché in debates of this kind, but it is often forgotten, that small firms supply the mass of employment opportunities. I imagine that that is as true in the Borders as it is in other parts of Scotland. We give a good deal of thought to trying to give people there the impetus, and the confidence, that will allow them to pursue their trade and commerce successfully.

Mr. Nicholas Winterton: As vice-chairman of the all-party parliamentary clothing and textile group, may I ask whether the Secretary of State is aware that Dawson International, and the clothing and textile industries, are strategic concerns that are important not just to the Borders and Scotland but to the United Kingdom as a whole? There is not always an alternative employer to put in their place if, because of unfair competition and the monetary policy that is being followed, they have to declare substantial redundancies and leave large sectors of manufacturing.
Does the Secretary of State accept that using monetary policy and interest rates affects the exchange rate? Does he accept that interest rates are themselves inflationary, and are making it more difficult for manufacturing industry not only to invest but to compete? Will he

intercede with the Chancellor of the Exchequer, and ask him to review the high interest rate policy that his Government are following? It is inflationary in itself, and seeks to defeat the very policy that he wants to succeed.

Mr. Dewar: In a sense, I cannot charge the hon. Gentleman with the sins of the last Government, whom he would probably have criticised with similar vigour.

Mr. Winterton: I did.

Mr. Dewar: I thought that the hon. Gentleman had. I thought that I had heard familiar tones from the past.
Let me repeat that these are economic policies in the round. It is important to get the balance right. The hon. Gentleman knows full well the Chancellor's policy, and the present arrangements for managing interest rates, which were widely welcomed when they were introduced.
Of course the textile industry is an important sector of our economy, particularly—and still—in the Borders; but all British industry must cope with the present interest rates and the present circumstances. The textile industry has problems, possibly because of its connections with the far east, but also, perhaps, because marketing has not been as effective at the higher end of the market as it has been in other areas. It is certainly disappointing to note the number of redundancies at Pringle's, for example. It is sad that it has not been possible for the management of an up-market and respected brand name, given its product range, to compete as effectively as it might have done.

Mr. Ian Bruce: Will the right hon. Gentleman reflect on what he has said? Anyone who reads Hansard will assume that the Government's policy is to have a stable pound at DM3 or above. I once ran an electronics factory in Galashiels, at which a skilled and brilliant Borders work force of textile workers were trained as electronics workers. At the rate of DM3 to the pound, the electronics industry cannot expand, and it is losing jobs. The additional 1,500 jobs at Dawson International will not be sustainable at that exchange rate.
Will the right hon. Gentleman tell the Chancellor of that situation? Will he please not ask the Chancellor for a stable pound, as manufacturers who want to go into the euro tell me that they want to go in at a rate of DM2.40 or DM2.60, but certainly not at DM3?

Mr. Dewar: I recognise the hon. Gentleman's point; it has been made about 15 times in the past half hour. It may not surprise the hon. Gentleman to know that the Chancellor is aware of that argument. I am happy to emphasise, although I do not know that it will help the hon. Gentleman, that we believe in stability. We also believe that the economy should be competitive, and that we should be in a position to earn enough revenue to generate profits to reinvest for a successful economy in future.

Mr. Martin O'Neill: rose—

Madam Speaker: It is my impression that the hon. Gentleman came into the Chamber after the statement. Is that correct?

Mr. O'Neill: Yes, it is.

Madam Speaker: Then I am sorry, but I cannot call him.

Local Government (Consultation With Young People)

Dr. Ashok Kumar: I beg to move,
That leave be given to bring in a Bill to give local authorities powers to consult with minors on the provision of, and budgetary strategies for, services designed to benefit minors.
In the modern age, change is constant and fast. New institutions are constantly created to ensure that decision making harmonises with the people's will. However, decisions directly relevant to one group who make up a large part of the United Kingdom's population are often made without meaningful consultation. Children, and young people below the age of 16, are not given the right to be consulted over many decisions. Most legislation is framed in what can be termed a "protectionist" mode. The position for the child is that protection is on hand, but his or her innate ability to express his or her views is not always recognised. That is the basis of the Children Act 1989, and it was the starting point for the United Nations convention on the rights of the child.
I am aware that these matters are often defined by statute law. Under such legislation, the powers given to others to act for minors are in the best interests of children, and my Bill does not seek to amend or alter those arrangements. However, vast areas of local authority spending and decision making profoundly affect the life styles of young people. I submit that those areas fall under that part of the UN convention that states:
each child should be consulted when his or her life is to be affected by a decision".
These are broad issues, and I am indebted to the hon. Member for Faversham and Mid-Kent (Mr. Rowe), who initiated a debate on 9 June in which he called for a youth parliament. The hon. Gentleman made many salient points, including one on children's right to make their voices heard. He said that a youth parliament should
set its own agenda, centred on what the young wanted to discuss, not issues foisted on them by an older generation."—[Official Report, 9 June 1998; Vol. 313, c. 876–77.]
I concur totally. I hope that the apparent cross-party support for measures to involve the young in the setting of social policy will encourage Ministers to take these issues forward.
The hon. Member for Faversham and Mid-Kent dealt only with national issues, but such an agenda could also be set for local matters, which affect young children immensely. It is not only education, spending on schools or the new opportunities for post-16 training that are emerging, but the type and format of leisure provision, road safety, and crime and the fear of crime. All those things affect the young boy or girl as much as, or more than, the voting adult.
In support of the Bill, I cite some original research carried out in my constituency by the Children's Society, in close co-operation with Redcar and Cleveland council and local schools. It took the form of a survey of children's attitudes to local services in a number of small ex-mining villages in the rural east of the borough. It was carried out last late last year by a small dedicated team of researchers.
The findings were graphic. The survey was striking for the maturity of the views expressed, and for the positive way in which local children wanted to make concrete

suggestions for bettering their home environment. They pointed to the need to ensure that parks and open spaces were well managed and, perhaps more importantly, provided the right facilities for the right age group. In that context, it is interesting to note that article 31 of the United Nations convention on the rights of the child calls for the right to play space for children within the community.
The children highlighted the problem of vandalism and their fears about bullying. They considered road safety on routes to and from school. We must get that right if we are to cut unnecessary use of private cars in home-to-school transport. Children are often the group out on the street the most. Their knowledge and suggestions could be directly useful as a factor in cutting road accidents. They noted that land use planning decisions often affected them the most deeply. After all, they will have to live with the results of bad or inappropriate planning decisions far longer than anyone else.
The study found that children were sometimes baffled by local authority decisions. For example, the local authority had recently had to dismantle some play equipment for health and safety reasons. The decision was never explained to local users of the facilities. When they found out the reason, the information came second hand, often from adults who knew about the issue only at second or third hand.
The children interviewed saw that as a cloak of secrecy laid over matters important to them. Why do we not ask children for their views on leisure and infrastructure? We consult designers, engineers and architects when we consider public provision for new buildings or other public facilities, and we often involve adult users, so why not young people too? Such consultation could help to change adults' views about children.
We are too often subject to moral panic in considering children's attitudes. Each year, there seems to be more legislation that seeks to deal with children within the confines of discipline or the framework of the criminal law. At the age of 13, a child can be put into a secure unit; at 14, sentenced for a serious crime; at 16, be expected either directly to work for a living or to make serious preparation for a career. All those activities are the concerns of adults, but we expect young people below voting age to bear the brunt of their effects and personal impacts.
Of course we are concerned about children's rights, but we do precious little to ensure that they can be exercised within the ambit of the democratic process. I am pressing for something modest that can be done easily.
I want local authorities to be formally requested and empowered to consult local children through recognised channels about their annual budgetary plans, in much the same way as they are required to consult local business interests. That is an integral part of article 12 of the UN convention on the rights of the child. I would expect the consultation to be directed primarily at secondary school age children, but there is no reason why the views of younger children should not be sought.
That could be done through adults who have responsibility for them, such as primary school teaching staff. However, we must ensure that it is the children's voice that is heard, and that the role of intermediaries is limited to that of facilitators. In my area, there are youth councils which are independent of, but supported by,


the local authorities and by schools and colleges. That network of youth councils needs to be extended to more meaningful discussions. With my Bill, we now have an opportunity to do that in more general areas of social expenditure and provision.
There are also broader and longer-term benefits to be gained. An increase in the active participation of young people in the democratic process and debate will ensure that room for structural conflict between young people and adults in society is reduced. The Bill will also increase the overall accountability of local authorities for the way in which expenditure decisions are made. Involving young people at an early stage will make them more conscious of the need to take greater responsibility for their environment, and help to build better citizens for tomorrow. I hope that the House will agree to give my Bill a Second Reading.

Question put and agreed to.

Bill ordered to be brought in by Dr. Ashok Kumar, Fiona Mactaggart, Mr. Lindsay Hoyle, Mr. Alan Campbell, Dr. Ian Gibson, Ms Jackie Lawrence, Dr. Phyllis Starkey, Mr. Barry Sheerman, Mr. David Chidgey, Mr. Peter Luff, Mr. David Prior and Mr. Andrew Rowe.

LOCAL GOVERNMENT (CONSULTATION WITH YOUNG PEOPLE)

Dr. Ashok Kumar accordingly presented a Bill to give local authorities powers to consult with minors on the provision of, and budgetary strategies for, services designed to benefit minors: And the same was read the First time; and ordered to be read a Second time on Friday 3 July, and to be printed [Bill 218].

FINANCE (No. 2) BILL

Ordered,
That, notwithstanding the practice of the House as to the intervals between stages of Bills brought in upon Ways and Means Resolutions, more than one stage of the Finance (No. 2) Bill may be taken at any sitting of the House.—[Mr. Jamieson.]

Orders of the Day — Finance (No. 2) Bill

Not amended (in the Committee) and as amended (in the Standing Committee), further considered.

Clause 7

RATES OF DUTIES AND REBATES

Mr. David Heathcoat-Amory: I beg to move amendment No. 48, in page 3, line 43, leave out £0.4499 and insert £0.4358'.
It was noted at the time of the Budget that the Government were using road fuel tax simply as a way of raising extra revenue without any genuine environmental reasons. To do that, they increased the annual escalator, or rate of increase, to at least 6 per cent. above the rate of inflation. By bringing forward the increases by the earlier dates of their Budgets, the Government have further added to the burdens on the motorist. The House of Commons Library has confirmed that at the present rate an extra £9 billion will be extracted from motorists over the life of the Parliament. That is over and above the inherited pattern of increases from the previous Government.
Most disturbing, the Government have singled out diesel for especially high increases. Diesel is the fuel of industry, so increasing the fuel tax in the way proposed is inflationary because the price of all goods is affected. It is also uncompetitive because it will widen the gap with the continent. It is anti-environmental because firms, especially small ones, will be less able to invest in new engines and fuel monitoring systems. After those two increases, which have already taken effect, under this Government, diesel in the United Kingdom is 70 per cent. more expensive than in the European Union on average. That gap is set to widen. The beneficiaries will be foreign haulage firms whose lorries will arrive in this country with cheap fuel in their tanks and take business from British haulage firms and jobs from British truck drivers. Another beneficiary will be the French Treasury, because British lorries travelling to the continent will fill their tanks with cheap French diesel.
The amendment cuts the increase to the rate that applied until the election. We want the Government to revert to the previous increase rate, so that the £9 billion hit on British motorists will disappear. The Government's policy is short-sighted, damaging to employment and bad for business, and we should like them, even at this late stage, to change it.

Mr. Christopher Leslie: I listened with interest to the right hon. Member for Wells (Mr. Heathcoat-Amory). I, too, consulted the Library and was told that the financial implications of his amendment would be £180 million-plus a year, especially for 1999–2000—indexed, of course.
It is curious that the Conservatives again propose measures that they claim will be popular, but do not say where the money will come from to meet the loss to public revenue. The amendment would cut the price of diesel by 1.5p a litre, but the consequences for the public


services of losing £180 million a year would be significant. The Conservatives do not say whether they would add that amount to public sector borrowing; whether they would increase taxes, such as income tax, to compensate; or whether they would cut vital public services, such as the health service or education.
Conservatives have not clarified their policy, but throughout proceedings on the Bill they have played the game of making rather profligate proposals that leave a black hole in the nation's finances, which so far totals about £5.9 billion. They have not said where that money is to come from. In the context of the amendment, it is important to note that the escalator principle was introduced by a Conservative Government, for environmental and anti-pollution reasons. The Government's measure may not have popular acclaim, but it probably has a degree of public acceptance because people appreciate why increases in the price of such fuels are necessary. They are to discourage excessive use of such fuels, to ensure that the tax base is protected and to force environmental concerns to the forefront of people's minds.
The Government's proposal is a responsible measure, which helps to protect the integrity of public finances. I urge the Government not to accept the amendment. As I said, there is a gaping black hole in the Opposition's proposals.

The Financial Secretary to the Treasury (Dawn Primarolo): I urge hon. Members to reject the amendment. The Government's commitment to raise road fuel duties by 6 per cent. a year above inflation has been clearly stated. It is only by increasing rates that the United Kingdom can make a sufficient contribution to placing the environment at the core of the Government's objectives for the tax system and further discourage environmental pollution by road users. That includes hauliers as much as private motorists or other road users whose vehicles run on diesel.
I remind the right hon. Member for Wells (Mr. Heathcoat-Amory) of the damage from emissions from diesel, especially particulates. The Department of Health suggests that 8,000 deaths are triggered by particulates and that, nationally, road transport produces 26 per cent. of those particulates and 46 per cent. of nitrogen oxide. The figures are considerably higher in congested urban areas, where, as we know, the health consequences are all the greater.
Unlike the previous Government, this Government are taking a lead internationally in promoting action to reduce greenhouse gases. The duty increase on diesel is a feature of that. Right hon. and hon. Members will be aware, although the Opposition constantly want to try to forget it, that the United Kingdom has now agreed to its share of the European Union target following Kyoto. That represents a 12.5 per cent. cut in emissions. Hon. Members claim that they want to reach that target and honour that commitment, and then do everything that they can in the House to undermine and vote against the very measures that will deliver it. Of the six greenhouse gases, diesel is a significant contributor to emissions of carbon dioxide and oxides of nitrogen.

Sir Robert Smith: Does the hon. Lady recognise that there is

concern that the Government's motivation is not so clear cut when it comes to the environment, given the damage that they are doing to the North sea oil industry that produces gas, which reduces carbon dioxide emissions, and their threat to gas generation in the electricity industry? Thus the Government's arguments that they are motivated by environmental policy tend to be thin. They seem to be motivated far more by the desire to raise money, as a Back-Bench Labour Member admitted earlier.

Dawn Primarolo: That demonstrates just how little the hon. Gentleman understands about the complexities of dealing with the carbon dioxide emission target and ensuring that we deliver national air quality targets, and ensuring that, in undertaking those activities, the Government have a balanced approach.
The amendment would effectively remove the duty differential between diesel and unleaded petrol. Conventional diesel has a greater energy and carbon content relative to petrol, which gives diesel a litre for litre duty advantage. The higher duty increase for diesel was put in place to offset that advantage and because diesel is worse than petrol in respect of particulate and nitrous oxide emissions.

Mr. Leslie: I should just like to ask my hon. Friend's opinion. A recent study was done in my constituency, where I have been recently advocating the completion of the Bingley relief road, because we are trying to achieve a reduction in pollutants and traffic emissions in town centre areas. One recent study showed that particulate levels were increasing at an exponential rate, particularly in areas of high congestion. If the amendment were passed, would not particulate levels be kept high, which would have significant consequences? Are there not great environmental benefits to her cause?

Dawn Primarolo: My hon. Friend is correct about the impact of the amendment and the likely increase in particulate emissions, but of course the Opposition are not bothered about that. They want only to say that they are interested in the environment. They do not want to pursue the policies that would deliver that.
The right hon. Member for Wells made the point that the proposal was damaging to the haulage industry, but he refuses to acknowledge the other measures that the Government have undertaken to assist the industry, including, in particular, concessions on vehicle excise duty of up to £500. He has refused also to acknowledge the Government's review of the current system for calculating vehicle excise duty rates for lorries; that, in this Budget, vehicle excise duty rates have again been frozen; that, overall, the Budget has cut the corporation tax rate for those businesses; and the introduction of quarterly payments for large companies, replacing advance corporation tax. The list goes on.
When the Government's proposal—with the Government's strategy—is seen in the round, it is clear that it is fair to the haulage industry, to the environment and to our constituents. I ask the House to reject amendment No. 48.

Mr. Heathcoat-Amory: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11

RATES OF GAMING DUTY

Dawn Primarolo: I beg to move amendment No. 19, in page 5, leave out lines 35 to 40 and insert—


'TABLE


Part of gross gaming yield
Rate


The first £450,000
2½ per cent.


The next £1,000,000
12½ per cent.


The next £1,000,000
20; per cent.


The next £1,750,000
30 per cent.


The remainder
40 per cent.'


During an earlier debate on clause 11 on the Floor of the House, in response to points made by several hon. Members, particularly the hon. Member for Rochford and Southend, East (Sir T. Taylor), I undertook to re-examine the table in clause 11 and its specific impact on casinos outside London whose gross gaming yield was in the range of £5 million to £12 million annually. The hon. Gentleman said that the provision would have a damaging impact on casinos and cited the cases of casinos in his own constituency.
Government amendment No. 19 will replace the table in clause 11—which will substitute for the table of gaming duty rates in section 11(2) of the Finance Act 1997—introduce new 20 per cent. and 30 per cent. duty rate bands, and revise the gross gaming yield thresholds set out in clause 11.
I agreed to consider the matter further, and there have been discussions with the industry on how the objectives could be achieved. In the light of representations about the impact of the Budget changes on the casino industry, I have tabled the amendment. I should say that, unfortunately, the industry was itself unable to reach any consensus on the model that it would prefer. I suppose that I should not be surprised that a number of individual groups offered proposals that met their own objectives but not necessarily those of their competitors.
Government amendment No. 19 will reduce the burden on casinos that are within the £5 million to £12 million gross gaming duty range. The Government's amendment deals with the specific point that was raised and will significantly reduce the burden on casinos in that range. I ask the House to agree to the amendment.

Mr. Michael Fallon: Another day, another climbdown; we welcome it.

Sir Teddy Taylor: From the Back Benches, I should like to pay tribute to the Minister for the detailed consideration that she gave to the case that we advanced, and to assure her that her detailed consideration and great understanding of the matter are greatly appreciated. I should like her to know that Back Benchers very much appreciate the Government amendment. It is greatly welcome in Southend-on-Sea, where we have many problems.

Amendment agreed to.

Clause 47

GIFTS IN KIND FOR RELIEF IN POOR COUNTRIES

Amendments made: No. 1, in page 26, line 25, leave out from 'used' to end of line 26 and insert
'in a designated country or territory either for medical purposes or by an educational establishment in that country or territory.'.

No. 2, in page 27, line 35, leave out 'and'.

No. 3, in page 27, line 37, at end insert
'and
medical purposes" includes medical research and the promotion of health.'—[Dawn Primarolo.]

Clause 51

CONVERTIBLE SHARES PROVIDED TO DIRECTORS AND EMPLOYEES

The Economic Secretary to the Treasury (Mrs. Helen Liddell): I beg to move amendment No. 15, in page 35, line 27, leave out 'or securities'.
This is a very simple amendment, the purpose of which is to remove from clause 51 two unnecessary words. Under the clause, employees who receive shares that subsequently convert to shares of another class pay income tax on the value of the new class of shares, less anything that they paid when they first received the shares. The amendment will simply ensure that employees who receive such shares are fairly taxed and closes a potential tax avoidance opportunity.
Convertible securities do not present the same problems and are therefore excluded from the scope of the clause. However, there is a reference to convertible shares or securities in one subsection of the clause. Although the reference to securities does not in any way change the effect of the clause, it might lead to some confusion. We have therefore decided to remove the two unnecessary words.

Amendment agreed to.

Clause 73

OTHER CHANGES TO REQUIREMENTS FOR VCTs

Amendments made: No. 4, in page 60, line 12, leave out
'(5) The preceding provisions of this section'
and insert—
'(4A) In paragraph 8(1) of Schedule 28B to that Act (requirement as to capital of the relevant company), for "£10 million" and "£11 million" there shall be substituted, respectively, "£15 million" and "£16 million".
(5) Subsections (1) to (4) above'.

No. 5, in page 60, line 14, at end insert
'; and subsection (4A) above has effect in relation to relevant holdings issued on or after that date.'.—[Dawn Primarolo.]

Clause 75

USE OF PEPS POWERS TO PROVIDE FOR ACCOUNTS

Amendments made: No. 20, in page 60, line 40, leave out from beginning to 'there' in line 41 and insert—
'(3) In paragraph (b) of subsection (4) of that section (power to provide for persons to be liable to account for tax wrongly relieved)—


(a) after "Board" there shall be inserted "either—
(i)";
and
(b) after "it" there shall be inserted "or
(ii) for an amount determined in accordance with the regulations to be the amount which is to be taken to represent such tax;".
(4) In paragraph (c) of that subsection (adaptation and modification of enactments to secure tax accounted for), in sub-paragraph (iii) after "tax" there shall be inserted "and other amounts".
(5) After that paragraph'.

No. 21, in page 61, line 6, after 'above;' insert—
'(cc) that an investor under a plan or a plan manager is, in prescribed cases where relief has been given to which there was no entitlement, to be liable to a penalty of a prescribed amount, instead of to any obligation to account as mentioned in paragraph (b) or (cb) above;
(cd) that liabilities equivalent to any of those which, by virtue of any of the preceding paragraphs of this subsection, may be imposed in cases where relief has been given to which there was no entitlement are to arise (in place of the liabilities to tax otherwise arising) in other cases where, in relation to any plan—

(i) a prescribed contravention of, or failure to comply with, the regulations, or
(ii) the existence of such other circumstances as may be prescribed,

would have the effect (subject to the provision made by virtue of this paragraph) of excluding or limiting an entitlement to relief;'.

No. 22, in page 61, line 6, at end insert—
'(6) In section 151(2) of the Taxation of Chargeable Gains Act 1992 (application of subsections (2) to (5) of section 333 of the Taxes Act 1988 to relief from capital gains tax in respect of investments under plans), for "(2)" there shall be substituted "(1A)".'.—[Dawn Primarolo.]

Clause 77

THE INSURANCE ELEMENT ETC.

Amendments made: No. 23, in page 63, line 9, leave out 'of the provisions of' and insert
'provision made by or under'.

No. 24, in page 63, line 13, at end insert—
'(7A) Without prejudice to the generality of the powers conferred by subsection (7) above, the provision that may be made in connection with an exemption from tax conferred by virtue of subsection (1) above shall include provision for section 436 to apply (with any such modifications as may be prescribed) in relation to section 333 business as it applies in relation to pension business.'.—[Dawn Primarolo.]

Clause 82

CARRY FORWARD OF NON-TRADING DEFICIT ON LOAN RELATIONSHIPS

Amendments made: No. 9, in page 67, line 7, at end insert—
'(1A) Section 797 (limits on credit: corporation tax) and section 797A (foreign tax on interest brought into account as a non-trading credit) of the Taxes Act 1988 are amended as follows—

(a) in section 797(3B)(b), omit "or in accordance with subsection (3) of that section";
(b) in section 797A(5), at the end of paragraph (a) insert the word "and" and omit paragraph (c) and the word "and" preceding it;
(c) at the end of section 797A(5), insert—



An amount carried forward to the applicable accounting period under section 83(3) of that Act shall not be treated as a non-trading deficit for that period for the purposes of paragraphs (a) and (b).";
(d) in section 797A(6) for "specified in subsection (5)(c) above" substitute "carried forward to the applicable accounting period in pursuance of a claim under section 83(2)(d) of that Act";
(e) at the end of section 797A(7) insert—
An amount carried forward to the applicable accounting period under section 83(3) of the Finance Act 1996 shall be disregarded for the purposes of paragraphs (a) and (b).".'

No. 10, in page 67, line 10, at end insert—
'(aa) in paragraph 6(da), after "period" insert "(other than one within sub-paragraph (dc) below)";'.

No. 11, in page 67, line 13, at end insert—
'(ba) in paragraph 7(1)(b), for "debit" substitute "deficit";'.

No. 12, in page 67, line 14, at end insert—
'(ca) in paragraph 13(1)(ea), after "period" insert "(other than one within paragraph (ec) below)";'.

No. 13, in page 67, line 18, at end insert—
'(f) in paragraph 16(1)(b), for "debit" substitute "deficit".'.—[Dawn Primarolo.]

Clause 83

FIRST-YEAR ALLOWANCES FOR SMALL BUSINESSES ETC.

Amendments made: No. 25, in page 67, line 26, leave out
'subsection (3C) of that section'
and insert
'the subsection (3CC) of that section inserted by section (First-year allowances for investment in Northern Ireland) above.'.

No. 26, in page 67, line 38, leave out from beginning to end of line 3 on page 68.—[Dawn Primarolo.]

Clause 119

TAPER RELIEF FOR CGT

Mr. Malcolm Bruce: I beg to move amendment No. 42, in page 108, line 40, at end insert—
'(4A) The total amount of taper relief which can be claimed in accordance with this section by any one taxpayer in any one tax year shall be limited to £5 million.'.
My colleagues, like the Conservative Members, initiated an extensive debate in Committee on the impact of the taper relief on capital gains tax—

Mr. Fallon: Where were you?

Mr. Bruce: I was ably represented by some extremely talented colleagues. I notice that the shadow Chancellor did not even put in an appearance, so I need no comments from Conservative Members.
There have been developments during the passage of the Bill which justify the amendment and with which the Government will need to deal. Even if the Government do not accept the amendment at this stage, their proposals, as they come into effect, will generate evidence that I suspect will make them wish to return to this matter in due course.
It has been suggested that, whether it was the intention or not, the capital gains taper will substantially reduce the capital gains burden for many of the very richest people in business, while it will increase the tax burden on smaller business people. I find it quite extraordinary that a Labour Government are deliberately altering the balance of capital gains tax in a way that seriously hits small businesses and enables a large number of extremely rich people to escape the full burden of the tax. The evidence has not been put forward by the Liberal Democrats; a number of independent tax consultants have said that the people who will make the most money out of the measure are tax consultants and, that being the case, they welcome anything that makes the tax system more complex. They believe that it substantially lets off the hook some people in business who are making substantial profits on the basis of the accumulation of the paper value of their shareholding.
A case in point involves the partners of Goldman Sachs. It has been estimated that, under the Government's proposals, they could potentially realise an escape from capital gains tax valued at £500 million. That massive tax concession is being promoted by a Labour Government while, as my hon. Friend the Member for Torridge and West Devon (Mr. Burnett) will wish to make clear, many small businesses will face an increased tax burden.
The Financial Secretary to the Treasury will appreciate that the purpose of the amendment is perfectly reasonable: to put a limit on the amount by which anyone can secure relief in any one year.

Dawn Primarolo: indicated dissent.

Mr. Bruce: When I see the Minister shaking her head, I am totally converted to the view that we are in the face of new Labour, which clearly believes that there should be no limit to the tax-free gain that people should be able to make. That differs greatly from the speeches that I heard from Labour Members during 14 of the 15 years that I have been in the House.
As it has been clearly identified by independent tax consultants that the Government proposals will allow many individuals substantial relief from capital gains tax, a limit of £5 million seems pretty generous. The amendment proposes that anyone who makes gains of £5 million in a year will benefit, and the relief will be ended only if the gains exceed £5 million in a year. That seems very reasonable, and most people would regard a £5 million tax gain as more than enough to keep them even for two years. Therefore, in the circumstances, I hope that the Government will respond constructively to a real concern that has been identified, which I would expect a Labour Government to balance with fairness and justice, taxing the rich according to their means and ensuring that the less well-off in business are given a fair return instead of an increased tax burden.

Mr. John Burnett: The changes that the Government are introducing on taper relief for capital gains tax raise a number of questions, but one is particularly significant.
Hitherto, a gain of up to £250,000 by a small business man or woman would be completely exempt from capital gains tax. The Government's new proposals would bring

into charge that small gain, so that an individual gaining £100,000 would pay £10,000 in tax and an individual gaining £50,000 would pay £5,000 in tax. Under the old rules, such an individual paid nothing. Let me ask the House to concentrate on an individual gaining £10 million. When the full taper relief comes into force in 10 years' time, that individual will pay £1 million in tax. Hitherto, under the rules that prevailed before this year's legislation, that individual would have paid £3.15 million in capital gains tax. Under the new Labour rules, the tax bill will be £1 million. I have one simple question for the Minister, and I am sure that many hon. Members also wish to know the answer: why do the Government propose to penalise the small business man or woman and give such a bonanza to the very wealthiest?

Dawn Primarolo: It is a shame that the hon. Member for Gordon (Mr. Bruce) was not able to be present in Committee to hear all the debates on the issue. It is also a shame that he seems to have forgotten that when we debated the issue in Committee of the whole House, the Conservatives moved an amendment that would have taken the taper to zero over 10 years, which would mean that after 10 years a gain would be untaxed. The Liberal Democrats voted to a person for that amendment. After that substantial debate—

Mr. Burnett: Will the hon. Lady give way?

Dawn Primarolo: No, I shall not give way. The hon. Gentleman will have plenty of time to explain to the House the apparent changes over such a short period in the Liberal Democrats' attitude—if we are not to assume that they are driven by opportunism rather than principled policy.
After the Liberal Democrats had voted for the taper to go to zero, they moved an amendment that stated that they accepted the taper and the principles of the Government's reform, but they wanted the Government to delay the implementation of the reform for a year.

Mr. Burnett: Will the hon. Lady give way?

Dawn Primarolo: I will not give way to the hon. Gentleman until I have put my case to the House. He has spoken and he can put his case in his speaking time.
The Liberal Democrats misunderstood—or deliberately failed to understand—the purpose of the Government's reform, which is to encourage long-term investment and reward entrepreneurs, while ensuring that everybody pays a proportion of tax, just as the Liberal Democrats say should happen with income tax. The amendment is driven more by newspaper reports than by principles of how capital gains should be taxed.
The amendment is uncalled for and unnecessary. It would undermine the Government's principle that, regardless of gain, a proportion of tax will be paid. The Liberal Democrats have failed to understand the enormous incentives that the reforms give to entrepreneurial activity and growth. I suggest that the House votes against the amendment quickly and that we move on to the next debate.

Mr. Malcolm Bruce: I appear to have touched a raw nerve. The fact that I was not present when the issue was


debated in Committee is not relevant. I am perfectly capable of reading the transcripts, discussing with my colleagues what went on and determining the argument for the development of policy.
It is clear that even Labour Members were concerned about the implications of the changes and supported the argument—even if they did not vote for it—that there should have been consultation and that a year's delay for that consultation would have been sensible.

Dawn Primarolo: So the hon. Gentleman is in favour.

Mr. Bruce: Of course I am in favour of consultation on an issue of such major concern. It is well known that the Conservatives wanted the headlines for trying to abolish capital gains tax, but could not find a way of doing so without creating the most massive income tax loophole ever envisaged.
Experienced practitioners—it is not a question of newspaper reports—pointed out that the Government had not fully considered the implications of their proposals. The Financial Secretary is digging her heels in to save face because she is not prepared to acknowledge that, had the Government consulted, the proposals might have taken a different shape. As I said in my opening remarks, it is quite unbelievable that a Labour Government are defending the right of fat cats to benefit from a massive tax reduction.

Mr. Burnett: rose—

Mr. Bruce: Does my hon. Friend want me to give way?

Mr. Burnett: No, I want to speak.

Mr. Deputy Speaker (Mr. Michael J. Martin): Order.

Mr. Bruce: I was only trying to help my hon. Friend to shorten the debate.
We have put forward a perfectly reasonable proposal that would help the Government out of a potential embarrassment, and we certainly intend to pursue it.

Mr. Burnett: rose—

Mr. Deputy Speaker: Order. The hon. Member cannot speak again except by leave of the House. Is it the will of the House that the hon. Member speaks again? [HON. MEMBERS: "No."] I hear an objection. The hon. Member for Torridge and West Devon (Mr. Burnett) cannot address the House again. The only reason why his hon. Friend the Member for Gordon (Mr. Bruce) was able to speak twice is that he moved the amendment and was therefore able to reply to the debate.

Question, That the amendment be made, put and negatived.

Schedule 3

ADVANCE CORPORATION TAX

Amendments made: No. 61, in page 156, line 7, at end insert—
'Section 109 of the Taxes Management Act 1970
5A.—(1) Section 109 of the Taxes Management Act 1970 (corporation tax on close company in connection with loans to participators etc) shall be amended as follows.
(2) In subsection (3A) (interest under section 87A on so much of tax under section 419 of Taxes Act 1988 as is referable to amount of loan or advance repaid shall not be payable in respect of any period after repayment made)—
(a) after "If' there shall be inserted "(a)";
(b) after "principal Act," there shall be inserted "or
(b) there is such a release or writing off of the whole or any part of the debt in respect of a loan or advance as is referred to in that subsection,";
(c) after "amount repaid" there shall be inserted ", released or written off"; and
(d) after "the repayment was made" there shall be inserted "or the release or writing off occurred".
(3) This paragraph has effect in relation to the release or writing off of the whole or part of a debt on or after 6th April 1999.'.

No. 62, in page 160, line 13, leave out second 'and'.

No. 63, in page 160, line 16, at end insert
'and
(c) after "the repayment is made" there shall be inserted "or the release or writing off occurs".'.

No. 64, in page 160, line 17, leave out from '(4))' to 'there' in line 18 and insert—
'(a) after "Where" there shall be inserted "(a)";
(b) after "that loan or advance," there shall be inserted "or
(b) the release or writing off of the whole or any part of the debt in respect of a loan or advance occurs on or after the day on which tax by virtue of this section becomes due in relation to that loan or advance,"; and
(c) after "repayment", in the second and third places where it occurs,'.—[Mr. Geoffrey Robinson.]

Schedule 13

CHANGES TO EIS ETC.

Amendments made: No. 6, in page 216, line 25, leave out '£10 million' and insert '£l5 million'.

No. 7, in page 216, line 27, leave out '£11 million' and insert '£16 million'.

No. 8, in page 234, line 5, at end insert—
'() provides a benefit or facility for the individual;'.—[Mr. Geoffrey Robinson.]

Schedule 16

TRANSFER PRICING ETC: NEW REGIME

Amendments made: No. 16, in page 258, line 50, leave out
'exemption from income tax or corporation tax in respect of the'
and insert
'any exemption from income tax or corporation tax in respect of, or of a part of, the income or'.

No. 17, in page 259, line 1, leave out second 'the'.

No. 18, in page 259, line 32, leave out
'paragraph 5(3) above is satisfied'
and insert
'sub-paragraph (3) of paragraph 5 above either—

(i) is satisfied, or
(ii) were any such exemption as is mentioned in paragraph (b) of that sub-paragraph to be disregarded, would be satisfied.'.—[Mr. Geoffrey Robinson.]

Schedule 18

COMPANY TAX RETURNS, ASSESSMENTS AND RELATED MATTERS

Amendments made: No. 29, in page 297, leave out lines 23 to 49 and insert—

'Claims that cannot be made without a return

9.—(1) No claim to which this paragraph applies may be made by a company before it delivers a company tax return for the period to which the claim relates.

(2) This paragraph applies to a claim by a company for any repayment of income tax called for by virtue of—

(a) section 6(2) of the Taxes Act 1988 (exclusion of income tax charge in case of UK resident company or income within chargeable profits for corporation tax), or
(b) exemptions from income tax conferred by the Corporation Tax Acts.

(3) This paragraph applies to a claim by a company for payment of a tax credit, unless—

(a) the company is wholly exempt from corporation tax or is only not so exempt in respect of trading income, and
(b) the tax credit is not one in respect of which a payment on account may be claimed by the company under Schedule 19AB to the Taxes Act 1988 (pension business).

Other claims and elections to be included in return

10.—(1) In Part VII of this Schedule (general provisions as to claims and elections) paragraphs 57 to 57B contain provisions as to the circumstances in which a claim or election may or must be made, or is to be treated as having been made, in a company tax return.

(2) A claim to which Part VIII or IX of this Schedule applies (claims for group relief or capital allowances) can only be made by being included in a company tax return (see paragraphs 64 and 76).'.

No. 30, in page 314, leave out lines 34 to 37, and insert—

'Claims or elections affecting a single accounting period

57.—(1) This paragraph applies to a claim or election for tax purposes which affects only one accounting period ("the relevant accounting period").

(2) If notice has been given under paragraph 3 requiring a company to deliver a company tax return for the relevant accounting period, a claim or election by the company which can be made by being included in the return (as originally made or by amendment) must be so made.

(3) If a company has delivered a company tax return for the relevant accounting period, a claim or election made by the company which could be made by amending the return is treated as an amendment of the return.

The provisions of paragraph 15 (amendment of return by company) apply.

(4) Schedule 1A to the Taxes Management Act 1970 (claims and elections not included in returns) applies to a claim or election made by a company which cannot be included in a company tax return for the relevant accounting period.

This applies in particular to a claim or election made—

(a) before any notice is given under paragraph 3 requiring a company tax return for the relevant accounting period, or
(b) at a time when its return for the relevant accounting period cannot be amended.

Claims or elections involving more than one accounting period

57A.—(1) This paragraph applies to a claim or election for tax purposes if—

(a) the event or occasion giving rise to it occurs in one accounting period (the period to which it "relates"), and
(b) it affects one or more other accounting periods (whether or not it also affects the period to which it relates).

(2) If a company makes a claim or election which—

(a) relates to an accounting period for which the company has delivered a company tax return and could be made by amendment of the return, or
(b) affects an accounting period for which the company has delivered a company tax return and could be given effect by amendment of the return,

the claim or election is treated as an amendment of the return.

The provisions of paragraph 15 (amendment of return by company) apply.

(3) Schedule 1A to the Taxes Management Act 1970 (claims and elections not included in returns) applies to a claim or election made by a company if or to the extent that it is not—

(a) made by being included (by amendment or otherwise) in the company tax return for the accounting period to which it relates, and
(b) given effect by being included (by amendment or otherwise) in company tax returns for the accounting periods affected by it.

Other claims and elections

57B.—(1) Schedule 1A to the Taxes Management Act 1970 applies to a claim or election for tax purposes which is not within paragraph 57 or 57A, whether or not it is included (by amendment or otherwise) in a company tax return.

(2) The provisions of this Schedule do not apply where or to the extent that the provisions of Schedule 1A apply.

Provisions supplementary to paragraphs 57 to 57B

57C.—(1) Paragraphs 57 to 57B have effect subject to any express provision to the contrary.

(2) Nothing in those paragraphs affects the time limit or any other conditions for making a claim or election.

(3) Where Schedule 1A to the Taxes Management Act 1970 applies by virtue of any of those paragraphs and the claim or election results in an increase in the amount of tax payable, all such adjustments by way of assessment or otherwise shall be made as are necessary to give effect to it.'.

No. 31, in page 320, line 32, leave out 'which one person' and insert
'which—

(a) a claim for group relief may be made without being accompanied by a copy of the notice of consent to surrender given by the surrendering company, and
(b) one company'.

No. 32, in page 320, line 34, after first 'of' insert
'claiming or surrendering group relief or'.

No. 33, in page 322, leave out lines 37 to 41 and insert—
'(5) A determination by the Inland Revenue under this paragraph is final and conclusive as to the basis of charge to be used for the accounting period concerned.'.

No. 34, in page 324, line 2, at end insert—

'Conclusiveness of amounts stated in return

84A.—(1) This paragraph applies to an amount stated in a company tax return for an accounting period which is required to be included in the return and which affects or may affect—

(a) the tax payable by the company making the return for another accounting period, or
(b) the tax liability of another company for any accounting period.

(2) If such an amount can no longer be altered it is taken to be conclusively determined for the purposes of the Corporation Tax Acts in relation to that other period or other company.

Sub-paragraphs (3) to (5) explain what is meant by "can no longer be altered".

(3) An amount is regarded as one that can no longer be altered if—

(a) the period specified in paragraph 15(4) (general period for amendment by company) has ended,
(b) any enquiry into the return has been completed and the period specified in paragraph 34(1) (period for amendment by company after enquiry) has ended,
(c) if the Inland Revenue amend the return under paragraph 34(2), the period within which an appeal may be brought against that amendment has ended, and
(d) if an appeal is brought, the appeal has been finally determined.

(4) If the return is amended by the company under a provision that allows an amendment after the end of the period specified in paragraph 15(4), an amount affected by the amendment ceases to be regarded as one that can no longer be altered until after whichever is the last of the following—

(a) the end of the period within which notice of enquiry into the return may be given in consequence of the amendment;
(b) if such a notice is given, the end of the period specified in paragraph 34(1);
(c) if the Inland Revenue amend the return under paragraph 34(2), the end of the period within which an appeal against that amendment may be brought;
(d) if an appeal is brought, the date on which the appeal is finally determined.

(5) If the return is amended by the Inland Revenue under paragraph 80(3) (consequential amendment of return where amount available by way of capital allowances is reduced), an amount affected by the amendment ceases to be regarded as one that can no longer be altered until after—

(a) the end of the period within which an appeal against that amendment may be brought, or
(b) if an appeal is brought, the date on which the appeal is finally determined.

(6) For the purposes of this paragraph an amount carried forward from a period for which a return was made under section 11 of the Taxes Management Act 1970 is not regarded as one required to be included in a company tax return for a later period.

(7) Nothing in this paragraph affects any power to make an assessment other than a self-assessment or the power to make a discovery determination.'.—[Mr. Geoffrey Robinson.]

Schedule 19

COMPANY TAX RETURNS, ETC.: MINOR AND CONSEQUENTIAL AMENDMENTS

Amendments made: No. 35, in page 335, line 35, leave out from '(4)' to end of line 40 and insert
'omit "by discharge or repayment".'.

No. 36, in page 335, line 40, at end insert—
'(4) After subsection (4A) insert—
(4B) Schedule 1A to the Taxes Management Act 1970 (claims and elections not included in return) applies to a claim for relief under subsection (4) above unless—

(a) the claim is included (by amendment or otherwise) in the return for the period in which the loan or advance was made, and
(b) the relief may be given at the time the claim is made.".'.

No. 37, in page 336, line 36, leave out from `Paragraphs' to 'do' in line 38 and insert
'57 to 57C of Schedule 18 to the Finance Act 1998 (general provisions as to procedure on claims and elections)'.

No. 38, in page 336, line 40, leave out '9(1)' and insert '9(2)'.

No. 39, in page 337, line 24, leave out '9(1)' and insert '9(2)'.—[Mr. Geoffrey Robinson.]

Schedule 27

REPEALS

Amendments made: No. 41, in page 385, line 27, column 3, leave out '589(9A)' and insert '589A(9A)'.

No. 14, in page 392, line 12, in column 3 at the beginning insert—
'In section 797(3B)(b), the words "or in accordance with subsection (3) of that section".
In section 797A(5), paragraph (c) and the word "and" preceding it.'.

No. 27, in page 392, line 20, at end insert—
'1990 c. 1. The Capital Allowances Section 76(3).'. Act 1990.

No. 28, in page 392, line 23, leave out 'This repeal' and insert—

'1. The repeal of section 76(3) of the Capital Allowances Act 1990 has effect in relation to every chargeable period ending on or after 12th May 1998.
2. The repeal of section 42(6) and (7) of the Finance (No. 2) Act 1997'.

No. 40, in page 398, line 30, column 3, at end insert—
'In section 419(4), the words "by discharge or repayment".'.
—[Mr. Geoffrey Robinson.]

Order for Third Reading read.

Dawn Primarolo: I beg to move, That the Bill be now read the Third time.
This is the second Finance Bill of the Parliament. It continues the process, which the Labour Government started on their election in 1997, of modernising the British economy, with the objective of raising the sustainable rate of long-term growth and ensuring that everyone has a share in rising prosperity. The Bill implements the second Budget of my right hon. Friend


the Chancellor of the Exchequer. The aim of the Budget is to turn ambition into achievement, encourage work, promote enterprise and support families.
The Bill is all about a Government keeping their promises and, in it, we continue our manifesto pledges. We have kept our promise to hold the basic and top rates of income tax at their current rates, which is delivered in clause 25. We have kept our promise to cut value added tax on domestic fuel to 5 per cent., which was delivered in the first Finance Bill, and not to extend VAT to food, children's clothing, books, newspapers and public transport fares. We have kept our promise to examine the tax and benefits system and announced the working families tax credit. We have kept our promise to reduce VAT on energy-saving materials for those in receipt of grants through Government and local authority schemes.
The Bill has sent the Opposition into confusion, especially the Liberal Democrats who, at times during the Bill's passage, were changing their policy positions as we progressed through the day, let alone the week. In Standing Committee on the Bill, the Opposition voted for amendments that would have cost at least £7 billion; in addition to which, they voted for amendments to the Social Security Bill worth £1.5 billion. The shadow Chancellor's view is that
There is no moral content in voting for more public spending",
but that is not a view we share. Which public services should be cut to make good the £8.5 billion? That is the question that the Opposition have to answer this evening. Which taxes would they increase? Would they prefer to create another debt mountain, like the previous Government?

Mr. Alex Salmond: On the subject of confusion, as the Bill has progressed through the Commons, has the Financial Secretary detected any change in economic indicators, for example, the exchange rate and the impact in terms of job losses, the upturn in interest rates and the unemployment figures? Has she detected any change in economic conditions and, if so, what is to be the Government's response?

Dawn Primarolo: What I have detected at this late stage is that the hon. Gentleman has finally participated in our deliberations, having seen no trace of him during the many hours, weeks and months in which we have debated both the Budget and the Bill.
The Bill introduces a number of measures to encourage work and to make work pay. Our reforms of the national insurance system will remove barriers to work that have faced many people in the past and will encourage employment. The new deal will be extended to provide new employment opportunities to the long-term unemployed, partners of the unemployed, the long-term sick, the disabled and disadvantaged communities. The working families tax credit will be a major reform of the tax system—necessary because the labour market has changed almost beyond recognition in the past 20 or 30 years—giving women the opportunity to combine family commitments with paid employment.
Throughout the country, firms are reporting skills shortages. At the same time, there is a huge pool of unused talent and the Government intend to ensure that

we use that talent. People who want to work will be able to do so; they will be helped to find jobs and to stay in the labour market. We are determined to give them the skills and opportunities that they need, which is something the previous Government failed pitifully to do. The working families tax credit and the reform of the national insurance system, together with our increased investment in education, training and skills, will begin to ensure that we have a labour market that meets the needs of the 21st century. Those measures, taken together, will make it easier for people to get into work, especially families with children; they are about giving people a future and giving them the hope that they want for that future.

Mr. Derek Twigg: I am pleased to hear what my hon. Friend has said. What does she think would have happened if Labour had not got in? What sort of future would those people have had?

Dawn Primarolo: I am sure that the Opposition can explain for themselves how they would have continued to fail to invest in skills and to preside over chaos in the tax system, particularly in regard to families with children, and how they would not have increased child benefit or ensured that young people have an opportunity to gain skills and jobs through the new deal. As we know, the Opposition opposed this Government's windfall tax.
Alongside all of that reform, the Government are promoting enterprise. We need to promote enterprise alongside labour market reform to create a dynamic business sector, which is an essential part of any economic policy. We have put in place a corporation tax regime to encourage long-term investment. We have the lowest rates ever and we are abolishing advance corporation tax. Business has widely welcomed those changes. We have cut the small business rate of corporation tax to 20 per cent. from next year. Both business corporation tax rates will be held at the new levels or lower for the lifetime of this Parliament—an undertaking that the previous Government never gave, which shows the confidence of this Government in their policy and in our firms.

Dr. Nick Palmer: Is my hon. Friend aware that during questions to the Chancellor this week, the shadow Chancellor said that he did not realise that the gap between Britain and Europe was widening on corporation tax? He thought that we were getting closer to Europe and becoming less competitive. Does it worry her that we do not have an Opposition who are in command of their portfolio?

Dawn Primarolo: I am sure that the shadow Chancellor will settle into his new position and will get up to speed on the relevant facts with regard to corporation tax.
The Government have also undertaken long-overdue reforms of the capital gains tax system to promote enterprise, reward risk-taking and encourage long-term investment in place of a culture of short-termism and expediency. The Bill introduces tapers, which will reduce CGT on business and non-business assets held over the longer period. The effective rate of capital gains tax will be 10 per cent. for business assets held for 10 years. It is right in principle that everyone should pay a share of tax on their gains.

Sir Robert Smith: Has the hon. Lady worked out the consequences of the Finance Bill, should the Government fail to control inflation? How much real tax will people pay, if one takes into account the inflation of assets?

Dawn Primarolo: If the hon. Gentleman had been able to hear all the deliberations through the long consideration of the Bill, he would realise that the prudent approach to the economy being taken by my right hon. Friend the Chancellor will deliver stability, investment and the security and sustainable growth that the country badly needs.
The Bill also introduces the new university challenge fund—a public-private partnership to provide £50 million in venture capital to help turn good research into good business, which is badly needed in this country.
There will be a further boost to first-year capital allowances to help fund investment—remaining at 40 per cent., rather than 25 per cent., for a further year. That is another indication of the Government's determination to ensure that businesses can grow and that investment is created.
The Government have also invested in the environment. We are committed to an annual increase in road fuel duties of at least 6 per cent. in real terms, which is slightly more than the previous Government's commitment of 5 per cent. The increase will help us to keep our commitment to greenhouse gas targets, which are crucial in meeting our Kyoto obligations. We will be consulting soon on measures to graduate vehicle excise duty to encourage the use of less environmentally damaging cars. The reduction, under clause 16, of up to £500 in vehicle excise duty for lorries and buses that meet the new low-emission standards and the changes in duties on diesel duties and road fuel gases will help to reduce the impact of transport emissions on local air quality. That is a vastly important measure.
In addition to climate change and local air quality, we are dealing with land use and sustainable waste management. The landfill tax, which was introduced by the previous Government, was an important first step in environmental taxation. The increase in the standard rate from next year should encourage waste producers to reduce their waste and to seek more sustainable ways in which to deal with it.
The Budget was about fairness. We inherited from the previous Government a situation in which one child in three grew up in poverty—this Government are determined to tackle that. We targeted support where it was most needed—on families. From next April, child benefit for the oldest child will increase by £2.50 a week, with an equivalent increase for poorer families through the family premium of income support and jobseeker's allowance—that is the largest ever increase. The new child care tax credit will pay 70 per cent. of the costs of child care—up to £100 a week for one child, and £150 a week for two or more children. To help fund the package to support children, we have reduced the married couple's allowance from 15 per cent. to 10 per cent. from April 1999.
Fairness also means ensuring that people pay their proper share of tax. The Bill contains a number of anti-avoidance measures to close loopholes and to prevent abuse of the system. That is why we ensured that the foreign earnings deduction loophole was closed.
The Government will continue to ensure fairness in the rates at which people pay their tax and that people pay what they are required to pay.
The Bill reforms inheritance tax to tighten up the rules on public access to inheritance tax-exempt assets. It is right in principle that exempt assets that are supposed to be open to the public are open to the public—that makes the system fairer.
We are encouraging savings as an essential part of our strategy. The Bill introduces the new individual savings accounts, which make it easier for people to save. Extending the savings habit to more people is absolutely essential.
The Bill reinforces our commitment to economic stability and to the promotion of enterprise. It shows our determination to modernise the tax and benefits system to make work pay. It is another step in delivering what we promised less than a year ago—long-term stability, with opportunity for the many, not only the few. The Bill is another milestone in the Labour Government's progress to those objectives, and I commend it to the House.

Mr. Heathcoat-Amory: The Finance Bill—all two volumes and 400 pages of it—is one long exercise in tax raising, and Conservative Members make no apologies for having voted against its tax-raising measures.

Mr. Andrew Love: The right hon. Gentleman talks about tax-raising measures, but would not the amendments that the Opposition tabled in Committee have imposed another £6 billion to £7 billion in taxes?

Mr. Heathcoat-Amory: The hon. Gentleman cannot even understand his party's Bill. Although he was on the Standing Committee, he cannot have been alert—we voted and argued against the Labour Government's tax increases, which have already done so much damage to the economy. If he cannot understand the difference between taxation and expenditure, he should not have been on the Standing Committee.
Last year, the Government targeted savings in their tax measures, and we are already seeing the damage that that caused. In this Finance Bill, they have targeted businesses. All businesses, which we try to represent, will suffer from an increase in corporation tax and from other measures—such as the increases in stamp duty and in road vehicle duties—that will damage the competitiveness of British industry in the wider world and hit the employment market in the United Kingdom.
We have already had an economically illiterate intervention from the hon. Member for Broxtowe (Dr. Palmer), who clearly cannot understand the difference between a nominal tax rate and the actual tax paid by businesses. If he does not believe me, perhaps he should read the Red Book, where the extra £2 billion from corporation tax advance payments is clearly set out.

Dr. Palmer: The shadow Chancellor, on one of his rare visits to the Chamber, said that the rates—not the total impact—of corporation tax and income tax were narrowing between Britain and other countries. That is the point that I was questioning.

Mr. Heathcoat-Amory: The hon. Gentleman is wrong to say that my right hon. Friend is a rare visitor to the


Chamber, but he will have noticed that the Chancellor makes no visits here at all, preferring to address the European Parliament rather than to defend his policies here. He prefers addressing media conferences organised by Mr. Rupert Murdoch to dealing here with the fiasco that his economic policies have created. In our term of office, we cut the rate of corporation tax from 52 per cent. to 33 per cent., and the Government are now raising the effective rate by £2 billion a year, as is clearly shown on page 18, line 8 of the Red Book, which I commend to the hon. Gentleman.
As only one example of their mean-minded measures and regressive taxation, the Government have ended the arrangement whereby those working overseas do not have to pay United Kingdom tax if they are abroad for 365 days. That will hit, not the tax avoiders and big earners, but the ordinary workers—nurses, engineers, aid workers—who cannot time their absences so that they can become non-UK tax residents. [Interruption.] The Government should be ashamed of that regressive measure.
The Financial Secretary talked about child care measures, but they are not even in the Bill. The Bill will enact all the tax-raising measures, and we are still awaiting any of the benefits that are meant to flow from them.
The new capital gains tax system is a fiasco, and I predict that we will need a rewrite. The system is far too complicated, and probably unworkable, and it is already backfiring on the Government. In a mean-minded way, the Government have withdrawn the retirement relief that benefited small businesses and replaced it with a tapering system that will give each Goldman Sachs partner an extra £16 million. Those are new Labour's priorities.
We extracted one or two small concessions from the Government. Because of the opposition and arguments of Conservative Members, they climbed down on dividend tax credits for non-taxpayers; there is to be a gaming duty revision; and they signalled that they would in due course accept our proposals for the reform of stamp duty and of the corporation tax payments for businesses affected by seasonal variation.
Labour Members were entirely silent in Committee and virtually silent on Report. As always, it is the Conservative party that defends the rights of taxpayers and businesses. The concessions may have been minor, but they were significant.
The Budget confirmed all the broken pre-election promises of a Labour Government, and the electorate will not forget that. I invite my right hon. and hon. Friends to vote against Third Reading.

Mr. Malcolm Bruce: There are some inherent unfairnesses in the Bill that the Government have not addressed. I give them credit for the fact that, on matters such as individual savings accounts and the tax credit for non-taxpayers, they have recognised the force of the arguments: they have changed the rules on ISAs and intend to amend the tax credit provisions as soon as they can find the right formula.
That is welcome, but the fact remains that the Bill contains provisions that grow out of an unbalanced economic policy. It was interesting to see that Labour

Members simply did not believe that changes to the foreign earnings rules would hit people such as overseas aid workers. They will hit people from my constituency such as overseas construction workers and those in the oil and gas industry.
It may be arguable that the package should involve a payment of taxation but, as we all know, many such people are on two or three-year contracts that were entered into on the clear understanding that the relief was part of the deal. This is effectively retrospective taxation on those people, and the Government should have taken some account of that.

Sir Robert Smith: Will my hon. Friend give way?

Mr. Bruce: No, I have only a short time.
The Government failed to recognise that they have completely distorted the capital gains tax regime. Abolishing the 100 per cent. retirement relief will clearly hit hard the small business people, farmers and others for whom the business is effectively their pension. They will be clobbered by an increased tax rate while very high earners will get a massive tax bonanza. The tabloid headlines may be about the Rolling Stones, but they will be completely unaffected. They will make their own arrangements, thank you very much, but other people will not be able to do that.

Mr. Fallon: Those points were made in Committee.

Mr. Bruce: Those points were indeed ably made in Committee by Opposition Members, but it is important to summarise on Third Reading why we take the view that the Bill is flawed and unbalanced.
The fundamental problem with the Bill is that it is based on an economic policy that is not delivering the Government's stated objectives. We do not have a stable exchange rate, or if we do, it is stable at a very high rate. We have rising interest rates and inflation, and it looks as though unemployment may be on the turn.
The Bill imposes taxation on the hard-pressed business sector that should have been imposed on the consumer sector to take the heat out of the economy and deliver results on inflation.
For all those reasons we, too, will vote against Third Reading.

Mr. Derek Twigg: For several weeks, we have had to listen to a lot of nonsense from Opposition Members, usually in the guise of insults to individuals about what we were doing or not doing in Committee, to cover their own inadequacies and incompetence in tackling the Bill.
I was on the previous Finance Bill Committee, and the performance of the Opposition was even worse this time, although, to be fair, there were one or two exceptions. The Opposition failed miserably to dent the Bill or the Government or to perform their task of opposition. For those who had to sit through the Committee, it was like Chinese torture, believe me.
The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) played a significant role in Committee. We had a detailed debate about how the Bill would damage those who own pushing machines in the arcades of


Littlehampton and Bognor. I did not know what pushing machines were, as pushers usually have a different connotation where I come from. I am not sure whether the machines should pay at a 2p or a 10p rate.
The hon. Member for Bognor Regis and Littlehampton also made an interesting contribution concerning tax relief on private health insurance. He tried to tell us, at about 2 o'clock one morning, that we should prevent people from using hospitals in Littlehampton or Bognor because they ought to take out insurance. He said that all the tourists who go to the area should carry health insurance and not bother using the hospitals. There seems to be a moratorium on visitors to his constituency using hospitals, which seems rather a good way of attracting people in.
We heard an interesting speech from the hon. Member for Guildford (Mr. St. Aubyn), who told us that the average person in his constituency often went to local auctions with a £10,000 table or painting—

Mr. Leslie: Or a carriage clock.

Mr. Twigg: Yes, carriage clocks were also mentioned. That is normal behaviour for the hon. Gentleman's constituents. When we were discussing historic houses, the hon. Gentleman said that he opened his house every weekend to visitors, and that he thought that every other Member should do the same.

Mr. Nick St. Aubyn: It is clear that, although he spent so much time in the Committee, the hon. Gentleman heard hardly a word of what was said to him.

Mr. Twigg: If that is all that the hon. Gentleman wishes to say, I will continue my speech.
Points have been made about foreign earnings. The Opposition were concerned about the Rolling Stones. Indeed, a point of order was raised at the beginning of one of our debates about the damage that the Bill could do to them. They have shown no loyalty to the country, have they? But that is what we have heard from the Opposition.

Sir Robert Smith: The Rolling Stones are a classic example of the fact that the tax man does not hit the high payers. He hits people like my constituents, whose employment as contractors for the oil industry takes them all over the world. They have little other option, if they want to continue to support their families. The tax is applied unfairly to them.

Mr. Twigg: The hon. Gentleman should talk to Conservative Members. I was a member of the Standing Committee, and I remember the reference to the Rolling Stones.
It was often said that we were sitting on our hands and were not speaking, but it was the Opposition's role to speak against the Bill. It was for us to support it. Opposition Members have forgotten what their role is: they are not yet used to being in opposition. What Opposition Front Benchers said in response to questions was usually couched in the form of some insult. It was suggested that some measures did not need to be debated on the Floor of the House. During the passage of the previous Finance Bill, the right hon. Member for Wells

(Mr. Heathcoat-Amory) was involved in delegating a fair amount of legislation outside the Chamber. It seems that it was all right for the Conservative party to deal with legislation in that way, but it is not all right for us to do so. The right hon. Gentleman tried to twist the argument. In fact, the Opposition's performance was pretty lamentable. It is difficult to think of any Opposition arguments that made any sense.
This is a tremendous Budget, which has been widely welcomed. The Chancellor has done an excellent job. As we learned from a fax that was sent to a Labour Member by mistake, the new shadow Chancellor had to speak to a Back Bencher to learn about economic policy before he was able to make a speech. How many shadow Chancellors have the Opposition got through so far? I wonder how long the shadow Financial Secretary will be in place. Perhaps he will be the next to move on, or perhaps it will be one of the other Front-Bench spokesmen.
We are not sure who decides the Opposition's economic policy. We do not know whether the Euro-sceptics agree with the Europhiles. Economic policy seems to be all over the place. But this Budget, and this Finance Bill, set the scene for a shift of resources from the better off to the least well off. There have been many other important developments. As was announced yesterday, a massive amount has been injected into the national health service to cut waiting lists, and money has also been provided to reduce class sizes. Lower taxes are being imposed on businesses: the Government are backing small firms to create jobs. Unlike the Opposition, we have thought in terms of long-term stability and investment, rather than boom-and-bust economics. Their approach to past Budgets has been characterised by short-termism. Having been through two recessions—and Black Wednesday—Opposition Members should not lecture us on economic competence. They made an appalling mess of the economy when they were in government, displaying their incompetence in a range of ways. We are having to pick up the pieces and clear up the mess that they made, which is shameful.
As was said earlier, many aspects of the Budget have not yet been mentioned, although they mean a good deal to ordinary people such as my constituents in Halton. They suffered massively from unemployment and poverty as a result of the last Government's policies. There are tax cuts for all employees who pay national insurance contributions; child benefit has been increased by £2.50 a week—£130 a year—which is the largest increase ever; and the Government have provided working families tax credit, child care tax credit and a cut in the business tax rate. The tax cuts for employees who pay national insurance contributions will give them more than £65 a year, and families with children will gain more than £250 a year.
A question was asked about families at Prime Minister's Question Time today: what has the Conservative party ever done for families? Nothing at all. This Budget does much more for them. The poorest 20 per cent. of families with children will gain an average of £500 a year. A family with a full-time worker will now be guaranteed take-home pay of £180 a week, and a couple with two children and an income below £17,000 a year will receive 70 per cent. of the maximum entitlement to child care costs. This Government care about families


and will do something for them, unlike the Conservative party. Families earning up to £30,000 a year will benefit from child care tax credits. That is superb.

Mr. Ian Bruce: On a point of order, Mr. Deputy Speaker. I am not an expert on the Bill, but even I know—and the Financial Secretary confirmed it to me—that none of these measures is included in it. Is it in order for the hon. Gentleman to mention them on Third Reading?

Mr. Deputy Speaker: It is normal to have a reasonably wide debate on the Finance Bill.

Mr. Twigg: Thank you, Mr. Deputy Speaker. Yesterday, you were generous to the right hon. Member for Wells, who, when we were discussing the narrow and specific issue of the retail industry, raised wide-ranging issues of economic policy. I accept your ruling entirely. The Conservatives are now complaining about us. The problem is that they do not like to hear what I am saying: it upsets them, because they realise that they have done nothing, that they are in disarray and that their economic policy is in a mess. They do not like hearing the good news that we have given the people of this country. I am surprised by the Opposition's reaction. It is typical of their reaction to the Finance Bill. I am sure you are glad that you did not have to sit through all the debates, Mr. Deputy Speaker; unfortunately, others did.
What upsets the Conservatives is that they could not cut corporation tax to the level that we achieved. In Committee, they came up with some spurious excuse for the fact that it had taken them 18 years to get the tax down to the level that they managed; but the point is that they did not reduce it to our level. They missed the opportunity, which is their problem.
The guaranteed income provided by working families tax credit is particularly important. It should be put in the proper economic context. [Interruption.]

Mr. Deputy Speaker: Order. I keep hearing hon. Members saying that the hon. Member for Halton (Mr. Twigg) is out of order. No one knows better than I do when someone is out of order, and the hon. Gentleman is not out of order.

Mr. Twigg: Opposition Members think that Labour Members are programmed to say certain things. It may surprise them that an awful lot of us actually agree with what the Government are doing. When I stood for Parliament on the basis of our manifesto, I supported that manifesto—unlike some who asked for help from various business men who are anti-Europe. We will not go into that, however. We are not sure what the Opposition support. Their economic policy is all over the place. Their spokespersons on education and on health say that not enough money is spent and there should be expenditure increases. Their Treasury spokesmen say that we should reduce expenditure, but they have produced initiatives that would cost £6 billion or £7 billion. They cannot say where the money would come from for that, which merely shows the economic incompetence that they displayed over 18 years. [Interruption.]
Perhaps national insurance reform is near enough the Finance Bill for Opposition Members. The burden is being reduced on employers in respect of most workers, who earn up to £440 a week. That is encouraging job creation. The Tories never encouraged job creation; they used to decimate employment. The current structure of national insurance contributions means that they bear particularly heavily on the low-paid, and we are trying to help them. Our policy is about getting people into work and making sure that they stay in it. [Interruption.] The Conservatives are not interested in the low-paid; poverty reached record levels when they were in power. Currently, £1 extra in weekly earnings can attract £1.28 in employee contributions. An extra 1p paid to a worker can add £6.30 to contributions. The system acts as a disincentive to both employers and employees.
Welfare to work is crucial to the Finance Bill. The Conservatives opposed the windfall tax on the utilities, but at the weekend we heard that Yorkshire Water would be paying its directors massive amounts of money. The Conservatives said that the windfall tax would cripple utilities, but they can still afford appalling massive pay increases for their directors.

Mr. Denis MacShane: As he is a customer of Yorkshire Water, is the hon. Gentleman aware that the company has increased bills by 8 per cent. for those who do not have meters, which is well above inflation?

Mr. Deputy Speaker: Order. The hon. Gentleman is certainly going wide of the Third Reading debate.

Mr. Twigg: My hon. Friend makes an important point about the whole economic system, how the utilities operate within it and the mess left by the Tories. Some of the Tories' chickens are coming home to roost, and we will have to deal with them. We have to pick up the mess. They expect us to do that in a year, but it took them 18 years, two recessions and Black Wednesday to make the mess. I do not want to repeat all that, but the Tories seem to forget it.
In Halton, where the unemployment rates for the young and the long-term unemployed are high—the demise of the chemical industry means that middle-aged men have problems finding jobs—the new deal for both the young and the over-25s will be very important. I have been to several meetings on the new deal for lone parents, and I have been told that the biggest disincentive to work for lone parents is child care. That message has come over clearly every time I have talked to a range of lone parents. Without exception, lone parents welcome the Government's initiative and the extra resources that we are providing.
Important points can be made about the new deal. We are giving help to employers, and introducing special measures for people over 50 and for partners of new dealers. All that is crucial to improving our economic development and economic growth.
Child benefits are another crucial part of our economic strategy. [Interruption.] They are about helping families. Children will gain an average £250 a year from the Budget. In 20 per cent. of the poorest households, children will gain an average £500 a year. Child benefits increases and equivalent increases in income support and other


benefits will help all families with children who do not already receive a high rate of benefit. Poverty affects large families worst. [Interruption.]

Mr. Deputy Speaker: Order. Hon. Members, who remain seated, keep saying that the matters raised are not in the Budget. Perhaps I should refer them to "Erskine May" so that they may be clear on what is happening. "Erskine May" says that on Third Reading of the Finance Bill
some degree of latitude is frequently permitted",
although that is not allowed on Third Reading of other Bills.

Mr. Twigg: Your ruling and advice are, as usual, excellent and on the ball, Mr. Deputy Speaker. You rightly rebuked me yesterday, and you have made the point clear to the Opposition. They do not like to hear good news coming from Labour. They want to go on living in their own little world, away from reality. They are worried about their seats; in that case, they should support us.
Child benefit is important to millions of families in the United Kingdom. The Conservatives are saying that those families are not interested in having another £2.50. [Interruption.] That is what they seem to be saying; they do not want to hear the news of a welcome and popular measure. After the Chancellor made his Budget statement, my local newspaper, the Widnes and Runcorn Weekly News, an influential newspaper read by many people in my constituency, did a vox pop interview with several of my constituents. The only person who did not welcome the Budget was someone who was not from the constituency and who was just passing through. My constituents welcomed in particular our child benefit measures. On petrol duty, they understood what the Government were trying to do about improving the environment. The Budget was welcomed by almost all those interviewed in the street on that day. Those were cold interviews. I did not set them up. I was not even there. Ordinary people stopped in the street welcomed the Chancellor's excellent Budget.
Sometimes, I wonder whether the Conservatives ever talk to their constituents. They tell me that they have had hundreds of letters about measures in the Budget. That may be so, but I must tell them that I had precisely two letters on the Finance Bill. The Conservatives told us that we would be inundated, and claimed that we were sitting on letters and hiding them away. In the real world, that was not so. The hon. Member for Bognor Regis and Littlehampton seemed to be the Member for the whole of Great Britain when he began to read letters from as far away as Yorkshire, Bristol and the south-east.

Mr. Jim Murphy: Dundee.

Mr. Twigg: I am not sure that he went as far as Scotland.

Mr. Ross Cranston: Dudley.

Mr. Twigg: Dudley was mentioned. My hon. Friend figured large in the Standing Committee, where he made some excellent points.
To hear the Opposition, one would think that the people were rising from the streets in revolution, and banging on the gates of Parliament to tell us how disgraceful the Finance Bill was. I seem to have missed that.

Mr. Deputy Speaker: Order. I have been able to help the hon. Gentleman on a number of occasions during his speech, but the Opposition's behaviour has nothing to do with the Third Reading of the Finance Bill.

Mr. Twigg: I appreciate that advice, Mr, Deputy Speaker. I merely wanted to make it clear that our debates in Committee may have given a false idea of the real state of public opinion.
The Budget is about economic stability, low taxes on work, help with child care, lower taxes on business and more money for health and education. It is a people's Budget, which will help to ensure that our country is prosperous, and that our economy is based on sustainable investment which will allow it to grow.

Mr. Salmond: The hon. Member for Halton (Mr. Twigg) should know that complaining about politicians talking to anti-European business people might be interpreted as a grave sign of disloyalty to the Chancellor. In the environment created by new Labour, he should be careful about the allegations that he makes.
I was moved to speak by what I can only describe as the triviality of the Financial Secretary's response to serious questions on the economy. When she was a Labour Back Bencher, she used to ask the then Administration, and her Front-Bench colleagues, serious questions about the direction of our economic policy. To respond to questions about the Finance Bill on its Third Reading—which are basically about whether, as amended, it is capable of dealing with our economic circumstances—by engaging in a yah-boo discussion on whether the Liberal Democrat spokesman was present at a meeting of the Committee or who said what to whom in Committee is inadequate.
This afternoon, there was a private notice question on the extent of redundancies in the Borders in Scotland. The question mirrored announcements the length and breadth of the country as the industrial economy bleeds as a result of the exchange rate and the Government's total reliance on monetary policy as a means of demand management. The hon. Member for Halton seemed to think that there was a huge contrast between this Budget and economic policy over the past 20 years. I have been in the House long enough to have seen two previous occasions when the Government relied solely on monetary policy as the means of economic management. The right hon. Member for Old Bexley and Sidcup (Sir E. Heath) described a Tory Chancellor as a one-club golfer. We are in the same circumstances with the same reliance on the same policy instruments, and it will have the same result for the industrial economy.
The Government's mantra is that this will bring about economic stability. I suppose that an industrial desert could be described as stability, but is there no recognition among Labour Members of the importance of manufacturing, of the competitive position and of the seriousness of the announcements that are made daily about job after job in every area and sector of the economy? [Interruption.] If the hon. Member for


Eastwood (Mr. Murphy) is so incapable of defending the Government's economic policy that he has to engage in economics of the actualité with youngsters on the "Trial By Night" programme, he should think carefully before appearing in debates in the House.
The bleeding of the industrial economy, the competitive position of United Kingdom manufacturing, the inability to use any policy instrument beyond monetary policy to control the economy, and the impact that that has in constituencies the length and breadth of the country are serious matters.

Mr. Burnett: The hon. Gentleman raises an important point. Does he agree that, if taxes had been imposed on consumption a year or so ago, we would not have the problems that he is adumbrating to the House? I, too, have had a factory closure in my constituency. At lunchtime today, 49 jobs were lost at Inch's cider factory in Winkleigh.

Mr. Salmond: In the imbalance between taxes on consumption and between taxes on investment lies one of the key weaknesses in the Finance Bill. That imbalance, as well as the uncertainty over the Government's exchange rate policy and their approach to the single currency, contributes to the high level of sterling and the inability of key sectors of our economy to deal with the consequences of the exchange rate position.
The previous Conservative Government used to argue that the jobs that were being lost, the sectors that were disappearing and the companies that were being downsized were the weaker sections of the economy and that the UK economy would be leaner and fitter after the process was complete. It was the same as arguing that we could improve the average health of the population by getting rid of everyone who could not run a four-minute mile. That would certainly improve average health, but the resultant population would be small. The argument is now repeated by Labour Members, who say that the diminution of the industrial economy will result in a leaner, fitter, more competitive manufacturing sector. However, the key economies, which have grown their manufacturing base, have not taken the attitude that they can dispose of entire industries and companies; they have used critical growth path to build up their competitive position to compete on world markets.
The central charge against the Finance Bill and the Financial Secretary is that they are incapable of addressing the different positions of key sectors of the economy: the consumption and service sector side and the manufacturing and export sector side. Is there any measure in the Bill that accepts that there is a manufacturing recession while the consumer part of the economy is still moving ahead? What are the Government going to do about it?
There is also the charge that the Government, like their Conservative predecessors, are unable to lift their vision beyond the south of England economy and consider how the regional economies in England and the Scottish, Welsh and Northern Irish economies are performing. It is ludicrous to argue that Scotland needs to restrain demand because of inflationary pressures in the Scottish economy. Where are the inflationary pressures that the interest rate

medicine in Scotland is designed to combat? As a modest start, it would help if the Monetary Policy Committee of the Bank of England included in its membership some people with direct experience of the sectors and regions of England and the nations of Scotland and Wales, to give some awareness that there is an economy that is suffering beyond Potters Bar.

Mr. Douglas Alexander: Will the hon. Gentleman give way?

Mr. Salmond: I shall not give way, and I shall tell the hon. Gentleman exactly why. There is more than a suspicion among Opposition Members that Labour Members are anxious not to move on to the next debate on student loans. I make no comment about House of Commons tactics, because I have used them myself, but the hon. Gentleman will forgive me if I do not assist him in delaying an embarrassing debate on student finance which many Labour Members do not want. [Interruption.]

Mr. Deputy Speaker: Order. The hon. Gentleman should be allowed to make his contribution without interruption.

Mr. Salmond: The serious points raised have been totally unanswered by the Government. They are blind to the economic circumstances faced in the Renfrew-Paisley economy and in many other areas across Scotland. There is no recognition that there is a serious economic problem which mimics the economic disasters provoked by the Conservative Government over the past 20 years.

Mr. Alexander: rose—

Mr. Salmond: This may be the new Labour party, but, for the manufacturing economy, it is the same old policy measures and the same old results: redundancies, downsizing and the diminution of the manufacturing base.

Mr. Leslie: I am grateful for the opportunity to speak on Third Reading. It is a pity that I have to say this, but it is a shame that the hon. Member for Banff and Buchan (Mr. Salmond), in his criticisms of Government policy and in seeking to bait the Government, was afraid to listen to the voice of the Government and to give way.

Mr. Alexander: Will my hon. Friend give way?

Mr. Leslie: I happily give way to my hon. Friend.

Mr. Alexander: Does my hon. Friend agree that the reason why the hon. Member for Banff and Buchan (Mr. Salmond) was frightened to give way might have been that, although he talked much about the service sector in Scotland, he did not mention the Scottish National party researcher who has recently recommended a boycott of a service sector company in the Edinburgh financial community?

Mr. Leslie: That is illuminating. Perhaps we will hear more about the SNP. As a Yorkshire Member, I would not wish to tread on the toes of the hon. Member for


Banff and Buchan, especially when he is not listening. The House looks forward to a contribution from my hon. Friend later.
The Finance Bill is a strong step forward on public sector finances and the economy. It ensures that provision is made for public services, that resources will be available to ensure they are of a standard befitting the 21st century, and that we can move forward into a climate in which Government and state services are high quality, accessible to many people, and provided at the most efficient and effective rate, giving good value to taxpayers.

Mr. Derek Twigg: I was taken by my hon. Friend's excellent comments on the public service ethic and his support for public service. In addition to this excellent Budget, does not the Chancellor's recent fiscal statement add extra strength and put down a marker to show how committed the Labour party is to public services?

Mr. Leslie: My hon. Friend is correct. I shall deal with "the code for fiscal stability" later in my remarks. It is important for us to set in context the fiscal situation that the country now faces. I am pleased to see that the nation's finances are now getting into a healthy state.
We are all familiar with the ridiculous profligacy of the previous Conservative Administration who, year after year, consumed taxpayers' resources. The leviathan of state swallowed up money in welfare budgets and social security payments unnecessarily, when we should have been using taxpayers' money to invest in infrastructure and job creation mechanisms to get people off benefit and into work. That would have reduced consumption of public sector resources, and enabled us to move on to other more productive public services.

Mr. Alexander: Can my hon. Friend give the House any explanation of why the previous Government were able to waste such huge levels of resources rather than investing in success?

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I hope that the hon. Gentleman will not respond to his hon. Friend's invitation, which would take us well beyond the scope of this Third Reading debate.

Mr. Leslie: I am grateful, Mr. Deputy Speaker. I do not wish to stray from the matters before the House today.
It is important that, when we look at the context of the provisions in the many clauses of the Bill and the revenue effect that they have on the Exchequer, we should consider why it is necessary for the Government to start to change the direction of this great oil tanker of state and move away from the old consuming tactics of the previous Administration. Each unemployed person cost £9,000 in benefit and revenue lost to the Exchequer. If we can reduce the number of people unemployed and claiming benefit, and simultaneously reduce social security budgets, we can use the money for more productive elements, such as education and the health service. We can then make provision for better services over the long term.
The fiscal state of the nation is becoming very healthy, thanks to measures in the Budget and the prudent and careful measures drafted and proposed by my right hon.

Friend the Chancellor. I am especially glad that provisions in the Budget help to shift from consumption to investment and, more important, to capital infrastructure investment. For example, I should like to see some of the capital infrastructure moneys raised spent on an important scheme in my constituency. The Bingley relief road is an excellent scheme, and it would be very helpful. The new priority of shifting from consumption to investment will, I hope, one of these days mean that resources come the way of my constituency to improve the economy in that way.
We are making sure that we use the nation's finances for capital purposes as a priority. That is what is called the golden rule of borrowing. We do not borrow to consume, but use the nation's resources to invest in more productive things—obtaining assets for the nation and making sure that items of infrastructure can be used for industry and create economic prosperity in the longer term. That is the right course of action. My right hon. Friend the Chancellor has set the ship of state on the right course, and I am pleased to support him.
The Budget and the Finance Bill contain many measures that modernise the tax and benefits system and begin to make work pay. I am pleased to see a number of fiscal policy measures put in place that give people the incentive and motivation to work and eliminate the poverty trap. It no longer makes sense for people to sit at home and claim benefit when there are opportunities for them to work and contribute to society. The Finance Bill plays a strong part in making those proposals a reality.
The Bill also helps to set the framework for economic stability throughout the country, ending the boom and bust years of Conservative administration. It is interesting to note the robust opposition to the Finance Bill put up this afternoon by the Conservatives. They seem to have given way and caved in so soon in the Third Reading debate. It is important to emphasise that boom and bust was not sustainable. It was the wrong policy for the Conservative Government to pursue. It is right for my right hon. Friend the Chancellor to put in place measures to plan for the longer term. We no longer have an economy based on short-term greed and profiteering, which can sometimes arise in companies that do not always take the longer-term interests of the country into account.
When we discussed monetary policy and inflation earlier, we heard about the difficult impact that boardroom excesses of companies such as Yorkshire Water would have on inflation. The company paid a 30 per cent. increase to its directors and a 69 per cent. increase to Kevin Bond, the chief executive. That was an outrageous example to set the nation. I hope that Yorkshire Water will reconsider that payment, given the outrage across all walks of life and the boardrooms of this country. Boardrooms have to recognise that they have a responsibility to play their part in prudent economic policy and control of inflation.

Mr. Derek Twigg: There are many tax changes in the Bill. They are designed to encourage people into work and give them an incentive to work. How does my hon. Friend think that that fits with the point that he has just made about pay? Pay is important in ensuring that the measures in the Bill work to regenerate the economy.

Mr. Leslie: My hon. Friend is right. The Tories sought to remove the Finance Bill from the wider context of the


other policy measures that the Government are taking, but those policies are an important component, and a crucial piece of the jigsaw in the Government's overall strategy. By ensuring that work pays by means of, for example, the national minimum wage and other such policies, and that the tax system reflects that strategy, the Government are pursuing the right policy.
Many of the provisions in the Bill relate to the national debt and public sector borrowing. On Report, the Opposition tabled amendments about the definition of national debt. It is important that we examine the state of the country's finances now and in the past, and consider where we would like to take them. The Conservative party left the country with a national debt of hundreds of billions of pounds. That is costing the taxpayer, year on year, £25 billion in interest payments alone. That money could and should be used on vital public services that people like, and on investment.

Mr. Jim Murphy: Has my hon. Friend noticed that the hon. Member for Banff and Buchan (Mr. Salmond), the leader of the Scottish National party, who spoke directly before my hon. Friend, has chosen to leave the Chamber?

Mr. Deputy Speaker: Order. I am having some difficulty understanding how that relates to the narrow discussion of the Third Reading of the Finance Bill.

Mr. Murphy: My hon. Friend and my hon. Friend the Member for Paisley, South (Mr. Alexander) said that they would allude directly to the comments of the hon. Member for Banff and Buchan. He refused to give way to my hon. Friend the Member for Paisley, South, and he has since left.

Mr. Deputy Speaker: Order. That is nothing to do with the content of the debate. If there is any matter that is out of order, I hope that the Chair will be equal to it.

Mr. Leslie: I am grateful for that guidance, Mr. Deputy Speaker. I hope later to deal with the points made by the absent Member for Banff and Buchan, and perhaps other hon. Members will do so.
I was talking about the national debt, and the £25 billion of interest charges that the taxpayers have to raise year on year just to stand still. That is a great weight and burden hanging around the neck of the public. That £25 billion could have been put to good use if the Conservative Government had not run up such debt by borrowing to finance their policies. They should have followed the policies that are in the Bill, and ought to have abided by a code for fiscal stability by which borrowing is used only to finance investment. From now on, the nation must practise good housekeeping: we must not borrow unnecessarily.
The Bill contains interesting clauses on income tax. I was a member of the Committee that examined the Bill and sat through many hours of Conservative comments and speeches. However, the Opposition did not table many amendments. Conspicuous by its absence was any mention by Conservatives that Labour has kept its promises on income tax, and has not increased the basic rate or the top rate. When people talk about Labour

breaking its promises, we must remind them that that is nonsense. Many years ago, Conservatives raised the spectre of a Labour tax bombshell, but people can see from the Bill that a Labour Government can be trusted with the nation's finances. The Government have delivered on the crucial income tax component of Labour's manifesto.
I am glad to say that the Bill provides for a scheme that will greatly benefit the poorest countries in the third world. The scheme is called millennium gift aid. According to the Library, many hundreds of millions of extra aid will be channelled to the third world. In co-operation with the Organisation for Economic Co-operation and Development, and, I think, the United Nations, a list of those countries has been prepared. We must make sure that we use not only monetary donations but donations in kind by the public and businesses to help those who are less fortunate than ourselves.

Mr. MacShane: In that context, does my hon. Friend agree that the country felt proud of a Chancellor who took the lead on the international financial stage? Does he also agree that that is in complete contrast to the mean and continuing cuts in overseas aid by the Conservative Government? The Chancellor's song resonated around the world, and at long last Britain could be proud.

Mr. Leslie: My hon. Friend is right: it was refreshing to read the Chancellor's comments in the Mauritius mandate. Through the millennium gift aid strategy and by other means, he took great steps to reduce the debt burden in third-world countries. I was pleased to note the Chancellor's generosity in the Bill. When we have the opportunity, we should shout about such achievements.
The Bill contains provisions for savings and investment. The Government are implementing strong policies to encourage saving and to make sure that we continue to provide generous tax relief to TESSAs and PEPs. That will be continued in a broader savings vehicle, the individual savings account, which will contain a wider variety of products.

Mr. Love: Does my hon. Friend agree that it was outrageous that, before Labour came to power, more than half our people had no savings, and that the previous Government did nothing to change that?

Mr. Leslie: That important point needs to be underlined. Encouragement for people to make pension provision has been lamentable. The Conservatives did nothing about that, and the spectre of unfunded pension liability grew year by year. They made no provision for people who had not been encouraged to save.
Thankfully, the Government's policies go a long way towards making savings more accessible, through a wider range of vehicles, and also more understandable. For example, there are welcome plans to make ISAs available in supermarkets and at other public interfaces. Ordinary people, not just those who can understand the fine print of TESSAs and PEPs, unit trusts and open-ended investment companies, will be able to save. It is a pity that there are not more OEICs.

Mr. Derek Twigg: My hon. Friend deals with an important part of the Bill. We have been accused of


making U-turns. Does he agree that we engaged in extensive consultation on savings and listened to people, and that the Opposition criticised us for doing so?

Mr. Leslie: That is correct—you're damned if you do and damned if you don't. Many people are cynical about politics, and that arises from the fact that 18 years of so-called consultations were completely hollow. The previous Government made up their mind before they consulted. They went through the motions and engaged in a mechanistic process every other day. It is refreshing that this Government listen to responses, reflect on them and incorporate them in their policies. The principles of ISAs have been carried through, and the detail reflects the views of those who responded to consultation. The Bill goes a long way towards making ISAs a reality.
There has been discussion of inheritance tax and historic buildings. In Committee, Conservative Members sought in their old traditional way to defend the rights and privileges of the wealthy elite. They tabled amendments to preserve a loophole in the law that gave such people unnecessary benefits and denied the wider public access to objets d'art.
The hon. Member for Guildford (Mr. St. Aubyn), who is not in his place, spoke about his contribution to the nation's history. He asked hon. Members to consider what a great philanthropic soul he was. He said that he opened his house, and that letting people "traipse" through the drawing room showed that "one was egalitarian".

Mr. Deputy Speaker: Order. The hon. Gentleman is drifting.

Mr. Leslie: I may be drifting, but the point I was seeking to make was the lack of reality forthcoming from the Opposition during the debate on the Bill in Standing Committee.

Sir Robert Smith: While the hon. Gentleman is on that issue of the Bill, does he recognise that, while there might be concerns to tighten loopholes, any legislation must be careful not to be retrospective? If someone has entered into an agreement with the state to do something in return for a tax concession, to revisit it could be considered retrospective. The matter must be carefully considered, case by case and on its merits. We must ensure that abuses do not arise, but we must recognise that there are genuine individuals who have a contract with the state, which should not be abused.

Mr. Leslie: rose—

Dr. Palmer: Will my hon. Friend give way on that point?

Mr. Leslie: May I pursue the line of argument?
This is not a private business agreement. This is the Government making decisions in the best interests of the overall economy. It is perfectly within the remit of the public sector and the Government to look at the varied effects of taxation, making sure that the best, most efficient and most effective deal can be got for the taxpayer. Clearly, throughout the passage of the Bill, the Liberal Democrats, making pledge after pledge and

spending commitment after spending commitment, never understood that they needed to raise some money to subsidise their giveaway bonanza.

Dr. Palmer: Does not my hon. Friend agree that the Opposition are stretching the concept of retrospective taxation when they talk in those terms, because, on that basis, one could say that any Member of Parliament should be able to object if the taxation rate on the salary that we had been led to expect were to be different after a year or two? Surely that would be unreasonable. Any financial arrangement that one may make with one's employer is on the understanding that external events, such as inflation under a Conservative Government, higher taxation under the Conservative Government or other events in government or outside, could affect it.

Mr. Deputy Speaker: Order. The hon. Gentleman is abusing the terms of the Third Reading debate, wide though they may be. As he has only just come into the Chamber, perhaps he should take the temperature first. Mr. Christopher Leslie.

Mr. Leslie: Thank you, Mr. Deputy Speaker. The comments of my hon. Friend the Member for Broxtowe (Dr. Palmer) speak for themselves, and strongly bat down the ridiculous comments of the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith).

Sir Robert Smith: Will the hon. Gentleman give way?

Mr. Leslie: Well, just this once.

Sir Robert Smith: The hon. Member for Broxtowe (Dr. Palmer) talked about events in the future, whereas I was talking about revisiting agreements that had already been entered into, where the state should tread carefully on the precedent that it sets on how it will behave in future. Agreements depend on both sides honouring them.

Mr. Leslie: rose—

Mr. Deputy Speaker: Order. Perhaps the hon. Gentleman will revisit the Bill.

Mr. Leslie: The Bill did indeed tread carefully, as the hon. Member for West Aberdeenshire and Kincardine suggests we should, in relation to this measure. It trod a steady course in ensuring that provisions were fair and equitable, in the spirit of the Government standing up for the many, not the few.

Mr. Love: I echo that sentiment. When the intervention took place, my hon. Friend was talking about conditional access agreements. Does he agree that those had fallen into disrepute, to such an extent that the signatories to the agreements did not need to make access available to the public? Therefore, any talk of retrospection is an argument against honourable change.

Mr. Leslie: Absolutely—an honourable change indeed. In fact, a Channel 4 programme, "The Mark Thomas Comedy Product", highlighted the abuse practised by some people exploiting this loophole in the law. The Bill


has now tidied up the loophole. It is good to see yet again the Government responding to the concerns of a variety of people, including comedians.
I want to look at other clauses of the Bill, in particular other tax—

Mr. Barry Gardiner: Before my hon. Friend moves on from that point, we had an important discussion during the Committee stage of the Bill, and I want to pick up the challenge that the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) has issued on retrospection. Clearly it is one thing for parties to a contract unilaterally to change that contract. It is another thing for the Government of the day to say that they will give certain reliefs to people who engage in certain behaviour, but it is, of course, always open to Government to say that that relief, or relief in that form, will no longer be available—

Mr. Deputy Speaker: Order. This is not an intervention on the speech by the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith). It is the hon. Member for Shipley (Mr. Leslie) who is speaking at present. That is far too long. Mr. Christopher Leslie.

Mr. Leslie: Thank you, Mr. Deputy Speaker. I think that the point made by my hon. Friend the Member for Brent, North (Mr. Gardiner) was enlightening and useful for me. I should be interested to hear his contribution later in the evening.
We have referred to the hon. Member for Guildford and his drawing rooms, and perhaps Fallon and his salons, but the clause that closes the loophole for heritage buildings, and other abuses on historic objets d'art throughout the country that enjoy tax relief, is an important measure that will be met with wide public acclaim—almost delight.
The foreign earnings deduction is one of the tax loopholes closed by the Bill. Throughout the Standing Committee, the Opposition made much play of the fact that somehow that is a great injustice. I cannot see how the deduction is fair for the good taxpayers of this country—the taxpayers who work day in, day out, paying their income tax and national insurance through pay-as-you-earn and other facilities. Why should they pay their taxes in full when so many people have the opportunity to exploit that deduction, by means of which they pay no tax in this country, and often no tax in the country where they work?
I cannot understand why the Opposition feel that this is a great rallying cry with which to go into the next election. We have a loophole whereby the super-rich have been exploiting the previous Government's wholly inadequate financial regulations by not paying any tax in this country. They remain residents, and are happy to call themselves British citizens, but they do not contribute to this country's public services. That is the important thing.
I do not mind paying my taxes. I can see the connection when I pay my tax, with the money going into the health service, schools, transport networks, and many other beneficial public services such as housing and social services. People need to recognise that it is not fair for

those people to earn sometimes many millions of pounds yet pay no tax, so that the burden lies on the shoulders of the rest of us who live and work in this country.

Mr. Love: Does my hon. Friend agree that all the concern expressed by Opposition Members during discussion of this issue about charity workers and others whom they would consider to be badly paid employees working abroad, does not square well with the excess £80,000 limit? As that can be doubled over two tax years, people living in this country can earn more than £160,000 tax free.

Mr. Leslie: Indeed. I have made a point about the revenue that we can gain by closing the loophole—£300 million will be raised by closing that loophole alone. I ask hon. Members to reflect on the uses to which that sum might be put in their constituencies, and the public service benefit that could be gained by removing the exploitation made possible by that loophole.

Mr. Derek Twigg: My hon. Friend has so far made an excellent speech. The specific point that he was making was on the overseas foreign earnings deduction. Had the Opposition's amendments on the matter been passed without any explanation about where the revenue would be raised, would they not have created a black hole in the Finance Bill?

Mr. Leslie: That has been the central focus of my work on the Finance Bill. Although Opposition Members may have thought that Government Members were not speaking to the Bill as much as we should have done, I was taking very careful notes on every one of the amendments that they tabled, to determine the possible effect on the Exchequer's revenue if they got their way in the Bill. I shall deal with that point a little later in my speech.

Mr. Deputy Speaker: Order. I should tell the hon. Gentleman that he may discuss only what is in the Bill, not what might have been in it.

Mr. Leslie: I am very grateful for that guidance, Mr. Deputy Speaker, and shall ensure that I bear it very much in mind throughout my speech.

Mr. Jim Murphy: I have been listening with some interest to my hon. Friend. I wonder whether, in Committee, much consideration was given to some prominent individuals in the United Kingdom, such as Baron Vestey, who in one year paid only £10 on profits of £2.3 million? It is a very uncomfortable situation for a Baron in another place to be able to act in such a manner. May I encourage my hon. Friend to investigate—if not today, then in future consideration of financial regulations—that very issue?

Mr. Leslie: The issue is very important. Closing such loopholes and ending exploitation of tax regulations by the rich and their accountants—who manage to examine the small print in all financial regulations—has been a success of the Government's approach to the issue. It is a pity that the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) is not in the Chamber. My hon. Friend the Member for Croydon, Central (Mr. Davies)


was very successful in comparing the accountancy profession with the bean-counting trade. Although I would never want to draw such a comparison, perhaps my hon. Friend will do so again later in this debate.
Although it is small, clause 116 demonstrates the Government's open-government attitude—which has itself ensured that, even in the hallowed halls of the Treasury and the Inland Revenue, Labour has been making provisions to fling open the doors, clear out the cobwebs and open up those institutions to the wider public, so that there can be better information about taxes and revenue.

Mr. Derek Twigg: It is the people's Treasury.

Mr. Leslie: Yes.
Clause 116 provides for people to claim tax relief from the Inland Revenue by telephone. Taxpayers across the country—including me—who are sometimes confused by their tax affairs, will now be able to pick up a telephone, speak to a friendly tax officer, explain their predicament, and, I hope, receive a very simple and common-sense solution. The facility will be available very shortly to most of the public.
A pilot study—which the Bill provides should begin in Scotland—of telephone claims will be conducted for the Inland Revenue.

Ms Helen Southworth: Does my hon. Friend agree that enabling claims to be made by telephone is one of the many measures that the Government are considering and starting to implement to reduce the burden on industry and business, and that reducing that burden is very important to industry and business? Does it not also once again demonstrate that the Government are not only listening but taking action?

Mr. Leslie: That is right. One thing that businesses in my constituency complain about most to me is the endless number of hours they have to spend writing letters and filling forms, simply to run their business. Although we heard much from the previous Government about deregulation and cutting bureaucracy and red tape, they never did much about it. In a small but significant way, this Government are showing in clause 116 how we can cut red tape, and that, instead of having to write a letter, it is possible to pick up a telephone, call the Inland Revenue and begin to make a claim.
One reason for locating the pilot study call centres in Scotland is that the Scots have a friendly, trustworthy accent. Across the country, focus groups and opinion polls on developing call centres have shown that the Yorkshire accent is also considered to be a very trustworthy, prudent and commendable one. I suggest to Ministers that, if they want to extend the pilot study to other areas, they should perhaps consider locating one call centre in Yorkshire—perhaps in my own constituency of Shipley, where we have many Inland Revenue employees and very large Inland Revenue offices. A centre would be more than welcome, and I am sure that it would be a very successful venture.
The Finance Bill contained many other measures—not all of which I seek to speak to, of course. However, the provisions on landfill tax have to be mentioned. The tax was introduced by the previous Government, yet it has

required some of this Government's attention. Recently, under the ten-minute rule, I introduced the Drinks Container (Redemption) Bill, which would reduce landfill across the country. I hope that that Bill is successful. However, I am pleased to see that the Finance Bill makes provision to ensure that landfill is not an easy option.
I have several quarries in my constituency—such as Manywells—that have been used for landfill, and have caused great concern to local residents. Currently, a planning application to establish another quarry in my constituency—at Buck Park quarry, in Denholme—is pending. Residents in Denholme—where I recently attended a residents' meeting—are very concerned that the site will be approved for landfill, simply because, as a nation, we throw away too much refuse and do not recycle as much as possible.
We should be encouraging people—actually providing them with incentives—to recycle, while simultaneously moving waste management strategy from use of landfill sites towards a better solution. I am pleased that the Bill makes such positive provisions to deal with landfill.

Mr. Love: Does my hon. Friend agree that, for the environmental reasons he has outlined, there is increasing resistance among our rural communities—which are represented mainly by Opposition Members—to increased use of landfill? Does he also agree that the landfill tax is one signal that the Government can use to try to deal with the problem?

Mr. Leslie: My hon. Friend is quite right. However, not many Opposition Members represent rural communities; Labour Members represent most of them. We are the ones who will have to consider those issues.
I conclude by contrasting the strategy chosen by Ministers in piloting the Finance Bill through the House with the amendments tabled and proposals made by the Opposition, and with the effects that those amendments and proposals would have on the nation's finances if they were ever to be implemented in future Finance Bills. I hope that they do not, which is why we need to give the Bill a Third Reading.
The Conservative party tabled many amendments, which involved a total of £5.9 billion—

Mr. Deputy Speaker: Order. I have already told the hon. Gentleman what he can and cannot do, but he may just have forgotten.

Mr. Leslie: No, I had not forgotten, but I accept your guidance, Mr. Deputy Speaker.
I was trying to contrast the Government's strategy as outlined in the Bill, which is to secure this country's financial and fiscal base and to make sure that sufficient revenues are raised and that fiscal tightening—

Mr. Deputy Speaker: Order. Perhaps I can help the hon. Gentleman further. On Second Reading it is possible to talk about what is not in the Bill as well as what is in it; on Third Reading it is permissible to talk only about what is in the Bill.

Mr. Leslie: Indeed. What is in the Bill is the strategy to secure the fiscal situation, a strategy that would not have been adopted by the Conservatives or the Liberal


Democrats. The Liberal Democrat party proposed amendments that would have cost £17.5 billion, and the Conservative party's proposals totalled £5.9 billion. Both parties left a black hole in their budgets. We do not know where they thought they were going to get the money from, and how they were going to pay for their commitments. I hope that my hon. Friends will tackle that important matter.

Mr. Edward Davey: I am sure that members of the public sitting in the Gallery will be astonished by this debate, as they may not be used to the filibustering tactics sometimes in evidence in the House. The hon. Member for Shipley (Mr. Leslie) was clearly filibustering, although the occupant of the Chair did give some rulings about what is and what is not in order in a Third Reading debate. You, Mr. Deputy Speaker, have shown significant flexibility and tolerance to the hon. Members who have spoken so far.
I shall refer specifically to an issue that was not debated fully in Committee—partly, I understand, because of a misunderstanding between the Whips at a late hour. It could not be debated on Report, because the relevant amendment to which I would have liked to speak—amendment No. 43—could not be selected. It is a key issue that the Bill does not cover properly. It relates to the proposals on insurance premium tax.
The Bill contains some measures—

Mr. Deputy Speaker: Order. Amendment No. 43 was outside the scope of the Bill, which is why it was not selected. I have to tell the hon. Gentleman, just as I told the hon. Member for Shipley (Mr. Leslie), that he must now talk principally about what is in the Bill. There is some latitude, but that is where the focus must be.

Mr. Davey: Thank you, Mr. Deputy Speaker. That is why I want to raise the issue on Third Reading. The Bill tries to deal with what are called selective rates for insurance premium tax, but it does not do so properly. It is important that the House should recognise that, because the Bill's failings in this respect mean that the House should not give it a Third Reading.
The matter was brought to the attention of the House by the hon. Member for Galloway and Upper Nithsdale (Mr. Morgan) on 27 January. His points were not answered properly in that Adjournment debate, although he made them succinctly and they could have been dealt with more effectively.
For some time now, there has been disquiet about the effects of the higher rate of insurance premium tax introduced by the previous Government in the Finance Act 1997.

Mrs. Liddell: On a point of order, Mr. Deputy Speaker. The hon. Gentleman is speaking about insurance premium tax. This afternoon, an amendment relating to IPT, which had been tabled by his colleagues, appeared on the

amendment paper, yet at no point did they seek to move or speak to it. Is it appropriate for the hon. Gentleman to debate the matter now when he did not do so then?

Mr. Deputy Speaker: That is not a point of order for the Chair. I have already given a ruling to the hon. Member for Kingston and Surbiton (Mr. Davey), and I shall be listening carefully to see that he sticks to it.

Mr. Davey: Thank you, Mr. Deputy Speaker.
The higher rate was introduced to tackle alleged avoidance of value added tax in the form of "value shifting" on a few goods and services relating to the travel, domestic appliance and motor vehicle industries. Many people feel that the case for this particular anti-avoidance legislation, which is referred to in the Bill, was never properly made, and that at the very least the previous Government were taking a sledgehammer to crack a nut. As the Financial Secretary herself asked on 6 February 1997:
Why have the Government taken a broad-brush approach that is likely to catch innocent commercial interests?"—[Official Report, Standing Committee B, 6 February 1997; c. 177.]
Whether or not there was avoidance in the form of value shifting that needed to be tackled, there is no doubt about the damaging effect of the selective higher rate of insurance premium tax introduced by the previous Government. By distorting competition between direct insurers and retail companies that also provide insurance, it has hit several sectors very badly, not only hurting commercial concerns but reducing good consumer protection practices. Indeed, the Government admitted as much in the Budget, but with respect to the travel industry alone.
In clause 144 the Government have chosen to level up the rate of insurance premium tax for all travel insurance, recognising the distortion to trade that the selective rate had caused. My contention is that the Government should have considered the other sectors affected by this selective tax—the domestic appliance and motor vehicle sectors—using the same rationale that convinced the Financial Secretary to review the impact on the travel industry, as she has done in clause 144. I believe that European Union law may soon force the Government to address the problem, whether they like it or not.

Dawn Primarolo: If this issue is so important to Liberal Democrat Members, why were they not here this afternoon to move the relevant amendment?

Mr. Davey: As I have already explained, I was disappointed to learn that amendment No. 43 was out of order. That is why I am now raising the wider issues involved.
The recent victory of Lunn Poly against the original introduction of the selective premium tax is especially germane to my point. The European Court found that the higher rate of IPT was incompatible with Community law to the extent that it constituted state aid under article 92(1) of the relevant EC treaty, and that the United Kingdom Government had not notified the Commission of that as they were supposed to.
As the Financial Secretary told the Standing Committee, Customs and Excise is appealing against that decision. It asserts that it has no implications outside the


travel industry, but many people outside the House do not share that opinion. Indeed, hon. Members may be interested to hear that the European Commission itself is not sure of the legality of the remaining selective rates. In answer to a question from the Liberal Democrat Member of the European Parliament, Graham Watson, Commissioner Monti said on 8 June:
the Commission has been in contact with the British authorities and is still assessing the compatibility of a selective IPT with Article 92".
Although the Minister may not wish to comment in detail on the matter because it is sub judice, I hope that she will at least admit to the House that the European dimension is a factor that will have to be considered in any review of the remaining selective rates, in addition to issues of fair competition. It is to those issues that I now turn, as they are especially germane to the Bill.
When the Financial Secretary replied to the debate initiated by the hon. Member for Galloway and Upper Nithsdale on 27 January, she did not reply to a large number of the substantive points that he made about the effect of the tax on the electrical retail industry and the motor retail industry. She was expansive in respect of the travel industry, and we can perhaps now see why, but I should like to draw her attention and that of the House back to the other affected sectors.
The first is the electrical retail sector. There is a great deal of evidence to suggest that the value shifting that Customs and Excise suspects has been taking place in the sector has not been happening, and that the tax is therefore not necessary. Some of the evidence was cited by the Financial Secretary herself in a debate on the Finance Act 1997. Other evidence was put forward by the hon. Member for Galloway and Upper Nithsdale in his debate: he quoted the report of the Monopolies and Mergers Commission on the supply of domestic electrical goods, which is directly relevant, as it argues that, far from reducing the price of electrical retail goods, companies have been keeping prices artificially high.
The Government cannot have it both ways. Either prices are being kept low to avoid tax, with value being shifted on to related insurance policies to avoid VAT, or prices are being kept high, as the President of the Board of Trade seems to accept.
The Government collectively seem confused on the issue, but the result of that confusion as regards insurance premium tax is serious damage to United Kingdom companies in terms of lost business and lost jobs. Last year, the Financial Secretary herself cited the examples of Thorn and Granada, which, between them, have lost an estimated £20 million and around 800 jobs across the country.
Ironically, the compliance costs to the sector have been exceedingly high. High-street television rental companies were forced to write to all customers explaining the change and to produce new contracts for customers wishing to renew. That exercise cost around £1 million, and the firms lost business. As a result, many electrical products are now sold without insurance cover. That diminishes the protection to the consumer, who may or may not go to a direct insurer. Of course, direct insurers are keen to step into the breach and are marketing themselves strongly to gain the business. However, many consumers will not have the same protection as before.
The Association of British Insurers has issued a general information sheet encouraging customers to buy insurance from direct insurers, as opposed to one-stop shopping. It poses the following question:
So how can I avoid paying the higher rate of IPT?
The response makes clear the intentions of the industry:
By not buying your insurance from the same place you buy your domestic appliance".
What greater evidence does Customs and Excise need of how the higher rates of insurance premium tax are distorting the market? What right does Customs and Excise have to do that? I hope that the Minister will examine the way in which officials looked at the case of the high-street electrical sector, as she was prepared to do for the travel industry. It has been unfair and almost vendetta-like.

Mr. Alasdair Morgan: Does the hon. Gentleman agree that many people outside the House who listened to Labour in opposition might have expected more from this year's Finance Bill? Unfortunately, it is yet another example of Labour saying one thing in opposition and doing something else in government.

Mr. Davey: I am grateful to the hon. Gentleman for that intervention. He makes a telling point. However, the Government deserve some credit, as they have made some progress on the travel industry. We should not be churlish, as we welcome that. Unfortunately, however, they have missed two major sectors, and that is causing great problems.
The second sector that the Government have failed to address is the motor vehicle retail sector, to which similar arguments about the problems of unfair competition and reduced consumer protection apply as a result of the failings of the Bill. I want to highlight consumer protection, as that aspect is particularly worrying.
As a result of its insurance policies attracting the higher rate of tax, as much as 50 per cent. of the motor vehicle retail industry has switched from issuing insurance policies to issuing warranties with its cars. The significance for consumer protection of that trend can best be appreciated if we examine the distinction between an insurance policy and a warranty. In essence, a warranty is an undertaking by the seller as to the condition of the property, and an undertaking that future deterioration of that condition will not arise. On the other hand, an insurance contract indemnifies the insured against loss or liability if and when such deterioration occurs. So the cover is different. A warranty is less attractive because it is not usually provided by a third party. If the seller goes broke, the warranty becomes useless. The consumer is protected only in so far as his or her supplier does not go bankrupt.

Dawn Primarolo: I am perplexed by the hon. Gentleman's concern about this subject. Will he say when he raised it in Committee and where were the relevant amendments? Third Reading is not the appropriate time to raise the issue. I do not remember his mentioning it in


Committee, and no amendment is mentioned in Hansard. Nor was the hon. Gentleman here to move his amendment earlier today.

Mr. Davey: The Financial Secretary may recall that the clause in question was debated very late at night when the Whips failed to make a proper agreement, so the argument remains germane and it is important that it is heard.

Dawn Primarolo: Is the hon. Gentleman saying that the issue is extremely important to his party except when he needs sleep or cannot get here in time for a debate?

Mr. Davey: The Minister does not seem to want us to raise the matter, and that is unfortunate. She was happy to raise it when she was in opposition, but now that her party is in government she does not want to hear about it. The hypocrisy is on her side for not addressing the issues now that she is in power.
The move away from insurance policies to warranties by many motor vehicle retailers—driven by this selective rate of tax—is seriously reducing consumer protection in this country. If the Minister is concerned about the state of the country's finances, she ought to listen. The Exchequer may lose even more money than it did from any previous tax avoidance—if such avoidance was occurring—because of the shift to warranties which fall outside the tax base. How ludicrous it is to have an anti-avoidance measure that reduces the revenue to the Treasury and exposes the ordinary citizen to greater risk.
So what is the solution? I believe that levelling down to 4 per cent. is the best solution, mainly because I do not believe that there should be any selectivity in principle.

Mrs. Liddell: Will the hon. Gentleman give way?

Mr. Davey: I have given way several times and I am now coming to the end of my speech.

Mrs. Liddell: rose—

Mr. Davey: I am not giving way—[Interruption.]

Mr. Deputy Speaker: Order. We cannot have barracking from the Government Benches. The hon. Gentleman is entitled to be heard.

Mr. Davey: I believe that levelling down would be the best approach and that, in practice, such a reduction, by ending the switch to warranties, would net more revenue for the Exchequer, for the reasons that I have outlined.
I hope that the Financial Secretary will address the points that I have raised. She seems to think that it was somehow illegitimate to raise them, but they are extremely important because they affect jobs and businesses outside the House. Whether the Government like it or not, they must address the issues, and I hope that they will have the courtesy to do so tonight.

Mr. MacShane: It is a pleasure to speak in tonight's Third Reading debate. For four years, I served on the Standing Committee considering the Finance Bill. In my view, it is the most interesting Standing Committee on which to serve because taxation represents the contract between the citizen and the state: it defines the relationship between the two and reaches into every corner of our existence. I regret that I have had to serve elsewhere for the last year, but no doubt one day my right hon. Friend the Prime Minister will release me from those duties, unpaid and unimportant as they are, so that I can return to my first love—tax and the Standing Committee.
I pay tribute first to my right hon. Friend the Chancellor, who has shown himself to be a fiscal Clausewitz. Clausewitz was the man who advised Napoleon at Austerlitz and then told him not to go to Moscow, but the French do not always take good German advice. Clausewitz believed in the concentration of forces. The Budget is the first in many years to focus hard on the key problems of the economy.
I should like to pay tribute to two personal friends—my hon. Friends the Financial Secretary and the Economic Secretary. Remarkably, having take a 450-page Bill through late-night sittings—we have heard from the hon. Member for Kingston and Surbiton (Mr. Davey) that the Liberal Democrats are the Horlicks party; once it gets late, off they go to bed—my two hon. Friends, unlike many of their fellow Ministers, appear, at the end of their dreadfully busy first year, to be younger than ever. That shows that Tory replacement therapy works. I look forward to many years of service from them on the Front Bench, and to their getting younger year by year.
The hon. Member for Kingston and Surbiton spoke eloquently and in some detail. He was not present in Committee to vote against the clause to which he was referring, and was not here earlier to move his amendment. No doubt he was taking his Horlicks somewhere else. He is wrong on his narrow point about insurance premium tax. It used to be said before the last election that the Conservatives were the party of garage owners—I think that they were described as the garagiste tendency. The hon. Gentleman is speaking up for the garage owners of Britain because they cannot make a little extra on selling insurance. He should also explain whether he is now representing Dixons, because he was doing valiant battle for electrical retailers. That is all the more interesting, given that Sir Stanley Kalms, the boss of Dixons, is leading some ludicrous anti-European crusade. There we have the Liberal Democrats—all things to all men.

Mr. Davey: The hon. Gentleman clearly was not listening to a word I was saying. I was speaking up for the ordinary consumer, who will lose out because of selective higher rates of insurance premium tax. The hon. Gentleman should be worried about that, because I am talking about his constituents.

Mr. MacShane: The ordinary consumer—or those who shop in Dixons—would be better served by a boss of Dixons who cut his prices rather than spending all his money on a crusade against Europe. We have had enough from the Davey lamp for the time being. There is very little illumination from that source.
I should like to focus briefly on how the Budget has affected my constituents. Rotherham is a great manufacturing centre. It still has Europe's biggest and most productive engineering steel plant. New firms are being created there. During the years in which I had the honour to serve the people of Rotherham before the last election, I often heard their demand for stability in the economy. We talk about the Tory 18 years or 19 years or whatever it was, but even before then my constituents suffered on an endless rollercoaster of inflation rates, interest rates and, of particular importance to my constituency, exchange rates.
The former Chancellor popped in for a brief chat—I see that his would-be successor, the right hon. Member for Wokingham (Mr. Redwood) has just appeared on the Front Bench. It is good to see him taking some time off from his new outside earnings. The Benches behind him are empty, because the Conservatives have given up on opposition. I thought that the constitutional duty of the Opposition was to oppose.

Mr. Deputy Speaker: Order. The hon. Gentleman is indulging in a great deal of embroidery. He should come back to the Third Reading of the Finance Bill.

Mr. MacShane: I do not want to plunge into the outside earnings of the Conservative party, Mr. Deputy Speaker.
Steel exporters had problems because between May 1990 and May 1997, the exchange rate of sterling against the deutschmark changed no fewer than 87 times. No exporter or manufacturer buying goods from the continent could live with that endless change. I know that the cliché "boom and bust" irritates the Conservatives, but I am happy to repeat it, because an awful lot of mud has to be thrown against a wall—even the empty wall opposite me—before it begins to stick. My right hon. Friend the Chancellor is searching for stability. I hope that he keeps to that aim.
There were disappointments for me in the Budget. I am a great believer in employee share ownership. I took a delegation to see my right hon. Friend and had an interesting meeting on the subject. There was nothing in the Budget on that, but I hope that the Government may come back to it. We must spread the fruits of people's work not just in wages, but in their share in the company for which they work.
The search for stability is an obsession of the Treasury Front Bench. I admire that. It contrasts with the flippant ups and downs of Budgets that I scrutinised as an Opposition member of Standing Committees considering previous Finance Bills. The Budgets of the previous Chancellor were like a Christmas tree—I think that that was the metaphor of the hon. Member for Gordon (Mr. Bruce)—decorated with all sorts of funny baubles in an attempt to attract votes here, there and everywhere. The British people saw through that meretricious dishonesty and kicked him out. Since then, the Opposition have had considerable difficulty in deciding on their strategy. They have removed one shadow Chancellor, but we are still waiting for some impact from his successor.

Mr. Deputy Speaker: Order. I am still waiting for the hon. Gentleman to come back to the Third Reading of the Finance Bill.

Mr. MacShane: I am particularly impressed by the Bill's step-by-step approach. Making work pay affects my

constituents more than any other issue. Achieving that at the marginal rates of tax that we inherited from the Conservative party proved all but impossible. The Chancellor's two Budgets have shifted the burden of taxation, so that work is subject to less tax, and unearned income and capital takes a fairer share. The working families tax credit is a move towards lifting the burden of taxation from the lower-paid. In 1950, a married worker with two children had to earn 107 per cent. of average industrial earnings—about £20,000 in today's money—before he paid any tax; and we wonder why the Attlee Government were so popular. Until the end of the 1960s, the state took 30 or 35 per cent. of gross domestic product in tax. My right hon. Friend the Chancellor is taking us back to the golden years of stability, employment, growth and investment.

Ms Sally Keeble: Will my hon. Friend give way?

Mr. MacShane: My hon. Friend must be quick; I want to sit down.

Ms Keeble: My hon. Friend has raised the point about making work pay. Does he agree that the £10 extra that the combined effects of the Finance Bill put into every average family's pocket in my constituency as a result of changes in tax structures will be extremely welcome, and is in complete contrast to the figures that Conservative Members have bandied about?

Mr. MacShane: The Conservative party was the party of the rich. Labour is the party of middle England and working England, Scotland, Wales and Northern Ireland—people who seek to earn an honest living and to amass savings that guarantee their future.
The step-by-step approach is sometimes so silent that one does not detect it happening. My right hon. Friend the Chancellor is a sort of stealth bomber, coming quietly over the horizon, taking as much money as is necessary, but not too much, and dropping his bombs on the irrelevant Opposition. I wish him well. I know that the Budget was welcomed by the business community, working families and the poor of my constituency.

Mr. Gardiner: Will my hon. Friend give way?

Mr. MacShane: If I may, I should like to finish. [Interruption.] Well, I could carry on. I wish the Finance Bill a handsome and solid majority on Third Reading.

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Mr. Malcolm Chisholm: As someone who served on several Committees that examined Finance Bills in the previous Parliament, it gives me great pleasure and pride to speak about this Bill, which is in such marked contrast to the Bills that we opposed over those years—contrary to the view given by the hon. Member for Banff and Buchan (Mr. Salmond), who has unfortunately fled the Chamber and the truth. Hon. Members who do not represent Scottish constituencies will not know that the Scottish National party's calculated core message is that Labour is the same as the Tories. That is arrant and demonstrable rubbish in the context of this Bill and, indeed, of other policies.
The primary objectives of the Government's economic policy, as seen in the Budget and the Finance Bill, are to raise the economy's sustainable rate of growth and to fight against poverty and social exclusion. They are the exact opposite to the objectives of the previous Government, who increased inequality over 18 years, and for many of those years, used unemployment as a deliberate instrument of policy.
Throughout proceedings on the Bill, we have heard opportunistic carping on particular aspects of Government policy from both the SNP and the official Opposition. Some of those aspects are the unavoidable short-term results of correct long-term policies. We have never heard from either party any coherent alternative economic strategy. Throughout the economic debates this week, the Conservative party has also attempted to rewrite or, rather, airbrush history to try to persuade people that everything that happened before 1 May 1997 is irrelevant. That is economic illiteracy.
The context of the Finance Bill is the inheritance of the previous Government. The salient features of that inheritance were a lack of stability and economic credibility and a serious structural Budget deficit, which the previous Government failed to address, in spite of 22 tax rises in their last Parliament. On top of that, we inherited problems of inflationary bottlenecks due to underinvestment and chronic shortages in human capital. There was a major productivity gap between ourselves and our main competitors. We inherited, too, the well-known fact that one in five families were without anyone in work. Those are the problems that the Finance Bill and the two Budgets have begun to address. Clearly, such problems cannot be turned around in a day, a month or a even a year.
The Government are concerned to do three things: deliver macro-economic stability, tackle supply-side barriers to growth and promote economic and employment opportunities for all. I know that some of my colleagues who are impatient for more rapid change find the objective of macro-economic stability rather boring. It is very easy for the SNP and others to say that it is a Tory objective. It is also difficult to communicate some of the complex economic policies to the public at large. It must therefore be made clear time and again that delivering macro-economic stability is a means to an end. It is a necessary precondition for all the other objectives of growth and employment.
There are many reasons for achieving macro-economic stability. One of great importance is that, without it, there is the threat of a return to boom and bust and, therefore, a disincentive for employers and others to invest. Investment is very much at the heart of what this Government are all about. That is why pension fund arrangements were changed in the first Budget last summer. We heard opportunistic carping about that, too—certainly from the Conservative party. The policy's clear purpose was to increase investment in the economy.
Many other policies in the Finance Bill are directed towards the same end. We have a new rate of corporation tax, there have been changes to the capital gains tax regime and we have seen innovations such as the university challenge fund. Those are very important supply-side measures to deal with underinvestment.

The Finance Bill also contains measures on training. The flagship welfare-to-work policy was introduced in the first Budget.
We must tell people that these are the objectives of Government policy; that this is what we are trying to achieve. By delivering macro-economic stability and tackling supply-side barriers to growth, we shall be able to raise growth. All that is a necessary precondition to our social objectives, on which we have already made significant progress. Most important, the working families tax credit, with its radical, innovative child care element, which we used to talk about endlessly in opposition and are beginning to deliver in government, clearly opens up employment opportunities and the rewards of employment to a much wider range of people.
Other policies in the Bill include changes in national insurance contributions, which act as an important incentive to employers to take on employees who earn up to £440 a week. There is a range of measures to make economic and employment opportunities more widely available. That is at the heart of the Government's strategy for tackling poverty and social exclusion in our society. When people say, as they sometimes do, "Why do you put emphasis on stability? Why don't you just get ahead and do something about poverty, unemployment and social exclusion?" it is important to explain that they are two sides of the same coin. That should be the core message that we try to get across.
Stability is not just about monetary policy—although that has been very important, and was dealt with in the separate Bank of England Bill. The purpose of that Bill should be explained, too. One of the reasons why the previous Government lacked any credibility was that they used interest rate policy politically. That was one of the problems that we inherited. They refused to put up interest rates before the election for political reasons, so inflation was heading for 4 per cent. and above. We had to address that problem; that is why interest rates have had to go up. The hon. Member for Banff and Buchan said that we were doing the same as the Tories. We are not; they tried to tackle inflation, but did not succeed. Their phoney monetary indicators in the early 1980s were not successful in dealing with inflation. We shall be successful. That is one side of the coin. It is, perhaps, more exciting to talk about the other side of the coin—the work opportunities and the attack on poverty—but without the precondition of stability, we shall not achieve those aims.
The same is true of fiscal policy, and I welcome the code for fiscal stability in the Finance Bill. As the Chancellor's public expenditure statement in June made clear, that fiscal framework does not mean that we are unable to deliver significant increases in public expenditure. I understand those who want a big bang approach to public expenditure—perhaps Liberal Democrats come into that category—but there is no point in having a big bang approach that cannot be sustained. Within the rules set out by the Chancellor, which were in our manifesto, we are able to achieve a real growth rate of 2.75 per cent. If that is sustained for the next five years, it will be an achievement that has not been managed since the 1960s.
The Government are also putting great emphasis on capital investment as part of the general drive for increased investment, which I referred to earlier, and we welcome that.
Clearly, the Government have the task of explaining their economic approach. It is very easy for the Opposition to caricature economic policy and dwell on short-term consequences, but this Government's economic objectives are absolutely contrary to those of the previous Government, and the results will also be contrary.

Mr. Nicholas Soames: On a point of order, Mr. Deputy Speaker. Do you agree that we are witnessing a sustained and concerted filibuster on the Bill, and are not such practices to be deplored by the Chair?

Mr. Deputy Speaker: Order. The Chair is aware only of speeches that are in order or not in order. The speeches that I have heard have been in order, except where I have chosen to correct hon. Members. It has been known for debates on the Third Reading of the Finance Bill to continue for several hours.

Mr. Alexander: The broad themes of the Finance Bill, as well as the detail, emerged in Committee. In particular, as my hon. Friend the Member for Edinburgh, North and Leith (Mr. Chisholm) said, the Government have made it categorically clear that, unlike the previous Government, they are determined to encourage work. That aim has undoubtedly been welcomed by my constituents.
For many years, my constituency has had a rate of unemployment higher than the national average, which is why welfare to work is not a slogan in Paisley, South, but a vital programme for many of my constituents. As the Chancellor made clear in his Budget statement, the welfare-to-work programme is now to be extended to provide wider employment opportunities particularly to groups such as the long-term sick and disabled. That matter is close to the heart of my constituents. Indeed, my predecessor, Gordon McMaster, was acknowledged on both sides of the House as a tireless campaigner on behalf of disabled citizens. Only two weeks ago, in Paisley town hall, I attended an awards ceremony for disabled people who have now found employment and gained greatly from that experience.
In the previous Budget, £195 million was provided for voluntary advice and practical help to disabled citizens to move back into work. Pilots will begin this autumn, with a view to the programme being nationwide by April 2000.
That approach reflects the Government's coherent strategy—that there is no contradiction between social justice and economic efficiency—which underpinned the detailed measures in the Budget. For years, under the previous Government, we were told that the price of a modern, dynamic economy was a divided society, but the individualism that characterised Thatcherite economics has been found wanting on major challenges such as tackling unemployment, which I mentioned, social exclusion and the environment.
The understanding underpinning the Finance Bill is that the ingredients of a good society in a modern global economy are also the ingredients of a successful economy. The Budget made it clear that the foundation stone is encouraging and rewarding work. The working families tax credit announced in the Budget will help lower and middle-income Britain, particularly families with children, to keep more of what they earn. No family with

earnings of less than £220 a week will now pay any income tax at all. Any family with a full-time worker is now guaranteed take-home pay of at least £180 a week. When people ask what the difference is between Labour and the Conservatives, they need look no further than that measure to see the difference that a Labour Government are making.
In keeping with the Government's recognition that good economics also makes for a good society, the Budget also addressed the needs of families in a modern economy. Child poverty has scarred this country for many years, as the work of organisations such as the Child Poverty Action Group has made clear. My hon. Friend the Member for Edinburgh, North and Leith mentioned that one family in five is raising children in poverty. That figure is all too well known after 18 years of Conservative government. That is why the announcement that child benefit for the eldest child is to be raised by £2.50 a week or £130 a year from April 1999 was particularly welcomed in constituencies such as my own. In addition, the new child care tax credit, which forms part of the working families tax credit announced in the Budget statement, will be welcomed by families throughout the country.
A fortnight ago, I had the privilege of opening a new class at Auchenlodment nursery school in my constituency, when parent after parent told me about the importance of child care. What is fundamentally different about the Government's approach, as made clear in the Budget and the Finance Bill, is that child care is not some add-on to economic policy, but central to their economic strategy.
The hon. Member for Banff and Buchan (Mr. Salmond), who was in the Chamber earlier, talked about the importance of the service sector of the economy and to that extent—perhaps only to that extent—I agree. Yet I would argue that if the hon. Gentleman is keen to assist the service sector of the British economy, he should support the child care measures announced in the Budget, as women in particular will benefit from them and, of course, the service sector provides employment for huge numbers of women.
Another theme of the Finance Bill to which I shall address my remarks is the measures to promote enterprise. The Bill makes a further 1 per cent. cut in corporation tax to 30 per cent.—the lowest rate ever achieved in the United Kingdom. In the era of the global economy, such a measure sends a clear signal that the Labour Government want to secure investment and ensure that Britain is the home for dynamic, profitable companies. In the global economy, with increasing specialisation and diversity, new jobs will come from a large number of small companies, not a small number of large companies. That is why the Budget announced a comprehensive package of measures to create a more dynamic small business sector in the UK economy, including the 1 per cent. cut of the small business rate of tax to 20 per cent. from April 1999.
Another element of the Finance Bill—a distinctively Labour element—has been fairness in taxation and spending. As a country in the modern global economy, the more we learn, the more we shall ultimately be able to earn. We cannot hope to succeed economically if we do not succeed educationally. That is why I welcome the Chancellor's announcement that an extra £250 million in 1998–99 will be committed to schools and skills.
To explain further the measures in the Budget, I point out that 80 per cent. of Britain's work force 10 years from now are already in the work force today. That is why, if we are serious about increasing workplace productivity in the United Kingdom economy, we must also direct our efforts towards raising skill levels of those already in work. I therefore particularly welcome the Chancellor's announcement of £10 million for the university for industry.
The final theme of the Finance Bill that I wish to touch on is stability. The need for stability has been mentioned in the debate and, given our country's economic record of boom and bust, it almost goes without saying. As the Bill makes clear, the key to modern economic success is to find the appropriate balance between stability and dynamism. Stability is essential for high levels of investment and employment.
The fiscal policy adopted by the Government adheres not only to the golden rule that over the economic cycle the Government will borrow only to invest, but to the rule that public debt will be held at a stable and prudent level over the economic cycle. The Finance Bill advances dynamism and stability, which is good economics, but it also advances measures on child care, child benefit and the working families tax credit, which is good politics and makes for a good society. The Bill ultimately nails the lie that the price of economic success is a divided society. That is why I commend it to the House.

Dr. Palmer: We often criticise Ministers for departmentalitis and for focusing exclusively on their own area, but we, too, are somewhat guilty of that tonight. Typically, debates attract specialists in the subject, so today we have more finance nerds in the Chamber than would be seen in a month of Sundays anywhere else. It is said that the average man thinks about sex every 20 minutes during the day, but the population at large would be alarmed to learn that our little sub-population contains people who think more often than that about the public sector borrowing requirement.

Mr. Leslie: Steady on.

Dr. Palmer: I exempt my hon. Friend from my remark.
I should like to consider three aspects of how the Finance Bill affects different parts of the Government's agenda. First, there is the working families tax credit, which was announced in the Budget and which is foreshadowed in some of the measures in the Bill. We are introducing the working families tax credit, which may be the most sweeping act of redistribution in any Budget for the past 50 years and is certainly an impressive step forward in helping the working poor, partly for reasons of justice and partly to encourage a return to work—to nail the lie that it is more profitable to stay on benefits than to work. Together with the minimum wage, which we also introduced, it means that we can say definitively to ordinary people who are out of work that it pays to retrain, it pays to work with the advisers in the new deal and it pays to get back to work.
We have to recognise that there are people outside whom that message will not readily reach, because their daily lives are so desperate that they have no time to

listen. They think that the working families tax credit is just one more obscure piece of politicians' jargon that bears little relationship to them. During the election, I canvassed a council estate where there is a high proportion of single parents. I met more people there who were not planning to vote at all than I met anywhere else in Broxtowe. They were not planning to vote, not because they were indifferent to politics, nor because they disliked all the parties, but because their daily lives were so desperate that they did not have time to consider the issues that we were putting before them. In the same way, I predict that we shall have difficulty showing those groups in society how the measures in the Budget and the Bill will transform their lives.
We have heard some unseemly gloating from Opposition Members about the fact that, in the initial reaction to the new deal, not everybody has taken up the offer with the alacrity for which we had hoped. One Opposition spokesman said, very cheerfully, that when they got the offer, many single parents threw it in the bin, as if that was good news of resistance to a tyrannical Government; but it is a tragedy when that sort of thing happens. My point is that the changes that we are making in the Finance Bill and foreshadowing to appear in next year's Finance Bill need to be followed up with publicity and information campaigns that reach people whom we do not normally reach—people who are indifferent to politics and who have given up the hope that the world of politics has any relevance to their world, or that anyone will come to their rescue. The Labour Government are determined to reach them and, through our efforts, we can make sure that such people benefit from the changes that we are making.
Secondly, I should like to talk about the foreshadowed change to vehicle excise duty. Curiously enough, it is unique to Britain that all cars—from the Mercedes Benz to the Ka—are taxed at exactly the same rate, regardless of how much petrol they use, or how efficiently they process petrol, or whether they use petrol at all. Environmental groups all welcome as a first step the action that we have taken. I commend to the House the Parliamentary Office of Science and Technology technical report No. 116, which analyses the VED proposal in some detail and draws attention to the fact that the different ways in which the change could be introduced would have extremely varied impacts on the environment.
Broadly summarised, POST says that if we do that in the optimal way for reducing fuel consumption, then administrative burden will be considerably heavier, because most of the information at the car registration centre—the Driver and Vehicle Licensing Agency—is not currently geared to that sort of information. Ideally, each car would be examined for its emissions at the time of its MOT test and taxed accordingly; but MOT centres are not geared to communicate their results to the central vehicle registration centre at the DVLA, so considerable investment in technology would be needed to achieve that. One step back would be to tax according to car type, as tested at the time when the type was introduced. The vehicle emissions from a Vauxhall Astra 1997 would differ greatly from those of a 1993 Astra—if there was such a beast. Therefore, one could reward manufacturers that wanted to invest in fuel-efficient technology by changing the rate of tax according to that standard. The drawback of that method is that some manufacturers would produce a car that was extremely efficient on day


one, but deteriorated rapidly. We want to support manufacturers that build energy-efficient motors to last and drivers who use their cars in a way that maintains that high level of energy efficiency.
I would argue that we should opt for those versions of the approach to vehicle excise duty that, in the longer term, can be used to phase in the measurement of individual vehicle emissions. Information technology is at the stage where, in five years' time, it will seem a trivial task for testing centres to communicate such information to the centre. I do not believe that, when introducing such an important principle for the first time, we should do so in a way that skimps on the essential objective of the change, which is to improve the efficiency of engines, to reduce emissions and, ultimately, to achieve the goals that we have set out to achieve in 2010.
Thirdly, I wish to highlight the generosity of the conditions for contributing to overseas development charities, which is a matter that has attracted relatively little comment—indeed, I know of overseas development activists who are still not totally aware of it. Although it has traditionally been said that overseas development is not an issue that the average member of the public finds fascinating, or attractive, or even welcome, that is certainly not what I have found in Broxtowe. Before the election, we published 15 policy papers on different issues—employment, health, education and so on—but it was the papers on the two more exotic subjects of overseas development and animal welfare that stimulated by far the greatest demand, with several hundred people requesting information on those subjects.
People have come to believe that politics in Britain has become a little bit too efficient and too oriented to the maximum level of marginal advantage at every level of the economy—that government and politics in Britain are in danger of losing their soul. When they look at the three aspects to which I have referred—the reinforcement of help to the working poor to make work worth while and to show that group in society that we care about them and that we are the first Government in 20 years to care about them; and our demonstration that we mean what we say about our environmental commitments and about our support for the developing world—the cynicism and disappointment that we have seen among many of our constituents can be countered and they will once again be able to faith in the political process. I hope that the House will pass the Finance Bill. It is a worthy Bill, and I am proud to be associated with it.

Mr. Ross Cranston: A number of my hon. Friends refuted the intervention by the hon. Member for Banff and Buchan (Mr. Salmond), who has wandered in and out of the Chamber at various times this afternoon and this evening, but has not stayed around to hear our responses. He asked what the Finance Bill does for manufacturing, which is important to my constituency. Historically, the black country has been a great manufacturing area and manufacturing is an important part of the economy, although I acknowledge that it accounts now for only about one fifth of national income.
The Bill contains important measures to encourage manufacturing, industry and enterprise. First, it will reduce the rates of corporation tax. Secondly, it contains important provisions on capital allowances. Thirdly,

it will change the company tax regime, which was an important feature of this Government's first Finance Bill—this Bill will continue to put that change in place.
Opposition Members raised all sorts of difficulties with the changes that we have made. Some of them still cannot accept the fact that we have put in place a corporation tax regime that will be more conducive to investment. Too often in the past people, institutions, pension funds and insurance companies tried to maximise the return on dividend income, to the detriment of investment in enterprises. Labour's two Finance Bills will put in place a corporation tax system that will encourage investment.
The move from the old to the modern system, which, incidentally, is a feature of such countries as the United States, creates certain transitional problems, but the Government have tried to deal with them, for example, through the phasing-in provisions to benefit charities. I raised certain problems concerning pensioner non-taxpayers, who will lose their tax credits under the Bill, with my hon. Friend the Paymaster General, who took that matter to heart. He and my right hon. Friend the Chancellor will deal with that in the coming months. The important point, which seems to be lost on the Opposition, is that the new corporation tax regime will be more conducive to an enterprise economy.
The fourth feature that the hon. Member for Banff and Buchan did not seem to take into account was the change in capital gains tax—the taper relief. Opposition Members raised a great deal of dust about the transitional problems that might arise due to the changes, but the taper relief system will encourage long-term investment holdings. The system works by reducing the proportion of capital gain that is liable to tax according to how long the asset is held. Different tapers will apply to business and non-business assets.
Members of the official Opposition—[HON. MEMBERS: "They are not here."] Yes, as my hon. Friends remind me, there are not many Conservative Members in the Chamber at present. They did not acknowledge that the taper relief system would have any effect on investment. Unfortunately, they do not seem to know their own economic history. They do not seem to realise that when they introduced major changes in the 1980s, these had a significant impact on investment. The changes in 1984 resulted in a surge in investment, which fell off in 1986 when the changes were reversed.
A study by Stephen Bond of Nuffield college reached the conclusion, based on that experience, that a tax system can affect investment. In considering the changes after 1986, Bond concluded that a tax system that leaves the cost of capital permanently higher by one to two percentage points is likely to depress the level of company investment by up to 5 per cent. Conversely, the changes in this Bill ought significantly to affect investment in time.

Mr. Derek Twigg: My hon. Friend makes an excellent point. Labour Members have often been accused of not understanding business and investment, but is it not the case that the Government want to encourage long-term investment and sustainable help for business? If we had accepted the Opposition's arguments, the Bill would have


done nothing to help business. Their arguments were about short-termism and other matters, but had nothing to do with helping business.

Mr. Cranston: I could not agree more with my hon. Friend. The Opposition focused on some specific points and did not seem to see the big picture.
In a recent summary of some 10 studies that assessed the impact of corporation tax and capital gains tax on investment, Mr. Jack Mintz states
The overall conclusion one derives from recent studies is that taxes affect investment decisions".
Conservative Members did not seem to acknowledge that important point. The changes in the Bill will have a beneficial effect on investment and manufacturing, particularly in the long term.
Fairness is another feature of the Bill. My hon. Friends have mentioned the important inducement to altruism contained in the provisions on millennium relief. Another feature worthy of mention is the way in which we have closed provisions that were conducive to tax avoidance. In Committee, Conservative Members seemed to be in a world of large capital gains.

Mr. James Plaskitt: And even larger houses.

Mr. Cranston: Yes, as my hon. Friend reminds me, it was a world of great wealth—

Mr. Plaskitt: Auctions.

Mr. Cranston: Of auctions and large investments, and that is not the world of the average voter, who is more concerned with measures in the Bill aimed at introducing a fairer regime, which will benefit the average person.
No Conservative Member mentioned the important provisions on transfer pricing as regards the activities of transnational companies and there was little mention of the provisions to deal with inheritance tax and closing some of the avoidance mechanisms there. We heard some squealing about the bed-and-breakfast provisions, as if those were a natural feature of any tax regime. In fact, they were an important avenue for tax avoidance.

Mr. Love: Does my hon. Friend share my astonishment at the cynicism shown by Conservative members of the Standing Committee, who continually chided the Government for abandoning the poor, despite the fact that the Conservative Government created the greatest inequality since figures began? Does he agree that the Bill will help to heal society and to reduce the divisions that the Conservatives created?

Mr. Cranston: I agree. The figures demonstrate that inequality grew more in this country than in any other Organisation for Economic Co-operation and Development country, apart from New Zealand, which was a scandal.
In Committee, we heard a great deal from Conservative Members about the legislative process; they said that the Government did not listen. The Government do listen. There was extensive consultation about the changes in

capital gains tax, for example, as a result of which the taper relief system was developed. Similarly, the Government listened to representations about individual savings accounts. There were no U-turns, as we said from the outset that we would consult people—something the Conservative Government never did—about what regime would encourage more saving.

Mr. Patrick Hall: On the Government's willingness to listen, I wonder whether my hon. Friend heard, earlier today, the hon. Member for Sevenoaks (Mr. Fallon) describe a Government amendment, which was tabled as a result of listening to people and which will improve the Bill, as a climbdown? Does not that show that the Conservative party's attitude to government is completely different from the Labour party's?

Mr. Cranston: That is very good point. The Labour Government are responsible; they consult people and work with business. The Conservative Government did not do that—Conservative Members do not know what consultation is, which is why they cannot understand this Government.
Also on legislative form, I want to deal with the canard that we have heard from the Opposition about retrospectivity. People have all sorts of expectations, but, historically, those expectations have often been disappointed because of taxation changes. When the rate of personal taxation increases, as it has in the past, I am disappointed. That is not retrospectivity, but Conservative Members do not understand that concept—they have misdirected their fire on that, as they have on so many other matters.
We also heard a great deal from Conservative Members about the regulation-making powers in the Bill. As my hon. Friend the Paymaster General said in Committee, the Bill contains no more regulation-making provisions than were in the last two Finance Bills under the Conservative Government. Such provisions are a typical feature of legislation—that may be unfortunate, and it may be more desirable if everything were provided for in primary legislation, but, as Conservative Members have reminded us, the Bill already runs to 450 pages—[Interruption.]

Mr. Deputy Speaker (Mr. Michael Lord): Order. Conversations are breaking out all over the Chamber. Hon. Members must listen to the hon. Gentleman who is addressing the House.

Mr. Cranston: Thank you, Mr. Deputy Speaker.
In creating regulation-making powers, we have been consulting. The draft regulations are available for several months, so that the business community and professional bodies that will be affected by them can give their comments.
The Bill fosters enterprise; it introduces stability; it facilitates altruism in the way that I suggested; and it puts in place important measures to ensure fairness.

Mrs. Louise Ellman: No one should be surprised at the token and transitory presence of Conservative Members during our discussion of this vital Bill. They must find it extremely distressing, I am


convinced, to see the beginning of the end of the work that they did over 18 years and to see the damage that they inflicted on so many members of our society being reversed.
The Bill, indeed, starts to reverse major parts of the previous Government's policy. Eighteen years of Tory rule produced greater inequality than at any time since the second world war. The poorest 20 to 30 per cent. of the population failed to benefit from economic growth, and the poorest payed the highest marginal rates of tax. Moreover, unemployment—in terms of the number of households suffering unemployment—doubled so that one in five households had someone out of work. I represent the most deprived constituency in the most deprived city in the country, so, day after day, I see the evidence of what happened. I note that all but three Conservative Members find the debate too painful to listen to.
The Bill will enact a Budget to start a new era. It will give more help to most members of our society, and it will give the most help to those who are the worst off. The poorest 20 per cent. of households with children will gain an average of £500 per year—that will assist 3.8 million children. That is in great contrast to Conservative Budgets, which inflicted the greatest hardships on the poorest and gave the greatest benefit to the best off. The Bill reduces the high marginal rates of tax on those in the lower income groups, which makes a significant start in ensuring equity.
The Budget helps all families. It provides for the highest ever increase in child benefit—again, that is in stark contrast to what happened under the Conservative Government, who significantly reduced the value of child benefit. The Budget also extends the new deal, to give new hope of employment to younger people and older people alike. The official Opposition are still opposed to that measure.
The Bill will direct most help to those who need it most. In doing so, it will develop and stimulate the economy as a whole. That is why I welcome the Budget's provision for significant capital investment, which will be implemented in such a way as to improve services for the community and to create relevant and important jobs. For example, the £250 million extra investment in education—making a total of £2.5 billion extra investment in education—will improve services and buildings and provide further essential jobs. The £500 million extra investment in the national health service—making a total of more than £2 billion extra—will improve services and employment.
The £500 million extra for public transport will help us to secure better infrastructure to improve our environment; it will also develop the economy and produce more jobs.

Mr. Patrick Hall: My hon. Friend mentioned extra money for education and health. Does she agree that it is ironic that the Opposition parties have criticised the Government for not spending enough extra on education and health when the Government have spent far more than the Conservatives or Liberal Democrats would have spent, according to their printed and announced programmes?

Mrs. Ellman: Indeed. The Budget marks a decisive change. We are investing in the economy and in jobs.
In addition to significant capital investment, the Budget makes special efforts to help small and medium enterprises: the backbone of our economy. The Budget

encourages that important sector by raising capital allowances and reducing taxes on those enterprises. Its encouragement for more innovative technologies promises more jobs, to the benefit of the whole economy.
The Budget should be considered in the context of the Government's general policies. It is directed towards producing more social and economic fairness. The Government are intervening to ensure that its benefits are felt where they are most needed, which is why we are going ahead with regional development agencies that will bring together the public, private and voluntary sectors to invest in regional economies. I note that the official Opposition are opposed to regional development agencies, as they are opposed to anything constructive.
The Budget promotes our efforts to deal with social exclusion, which is another inheritance of the 18 years of Tory rule. It also promotes communications. It took a Labour Government to rescue the shambles of the channel tunnel rail link deal left by the Tories. That will be important to the regions and the whole country.

Mr. Derek Twigg: My hon. Friend will know that my constituency is only a few miles from hers. She hit on the important point that the Budget and the Government's general policies are designed to benefit not only the south-east but the whole country. We want the communication links to be in place and the economy of the whole country to be vibrant.

Mrs. Ellman: My hon. Friend makes an important point. It is essential that the Budget should deal effectively with the macro-economic situation, but for that to be effective we also need mechanisms to deal with regional and local issues, to ensure that the benefits are enjoyed where they are most needed. I applaud the Government for all that they have done on macro, micro and regional levels.
The Budget is the beginning of the creation of a new era. It is highly regrettable that the official Opposition cannot even bear to hear about it.

Mr. Love: Does my hon. Friend note the fact that Her Majesty's official Opposition moved none of the amendments that they tabled today? The foreign earnings deduction amendments took a whole day in Committee, but no one from the official Opposition was here to move them today.

Mrs. Ellman: My hon. Friend demonstrates effectively the official Opposition's ineffectiveness and irresponsibility. Their record speaks for itself. They created a divided society and record unemployment and showed a callous disregard for justice. The Budget is the beginning of a new era and I commend it to the House. I look forward to the Government developing policies that will bring social and economic justice to the country as a whole.

Mr. Patrick Hall: On a point of order, Mr. Deputy Speaker. I am inspired by the hon. Member for Mid-Sussex (Mr. Soames) to seek your guidance on whether the absence of contributions from the official Opposition demonstrates a sustained abdication of responsibility.

Mr. Deputy Speaker: Order. That is not a matter for the Chair.

Mrs. Liddell: Several of my hon. Friends have drawn attention to the vast emptiness on the Opposition Benches. It would be useful if the House were aware of the fact that the official Opposition asked for two days to discuss the Finance Bill on the Floor of the House. As a Government who are committed to proper accountability and scrutiny, we were happy to arrange for those two days, but chaos has reigned on the Opposition Benches from day one.
I thought that the high point—or perhaps the low point—had come when the right hon. Member for Wells (Mr. Heathcoat-Amory) had to be got out of his bed in the middle of the night and brought into the House to adjudicate in a fight between his Front-Bench and Back-Bench colleagues. The Whips had totally abdicated responsibility and had to send for the right hon. Gentleman to haud the jaikets, as we say in the west of Scotland. I am glad that he had the chance to change out of his jammies before coming to the House.
We have had a good debate, and I commend my hon. Friends for some studied speeches that obviously took great preparation. We take the job of government extremely seriously. We regard the tasks of government and of representing our constituents as a privilege, which is why we have worked so hard on Third Reading. I am grateful to my hon. Friends on the Back Benches for the assistance that they have given to Ministers.
I pay especial tribute to my hon. Friend the Financial Secretary, who has had the heaviest burden. This has been a lengthy and detailed Bill. Not all the work takes place in the House, because much preparation has to be done in advance.
The debate has been remarkable in that we have had the rare privilege of a visit from the hon. Member for Banff and Buchan (Mr. Salmond). It is always a pleasure to see him at his work. I am sorry that he did not manage to stay in the Chamber terribly long, but he addressed us from his Olympian heights and I will respond to him with pleasure.

Mr. Salmond: rose—

Mrs. Liddell: I have to consider whether I should give way to the hon. Gentleman, because, with characteristic arrogance, he refused to take interventions from my hon. Friends this evening. However, I will of course take his intervention, because it is so rare a pleasure to see him at his work.

Mr. Salmond: That must be the longest preamble to giving way that I have ever heard. [HON. MEMBERS: "Get on with it."] Well, if the concession is so long, the intervention can be long as well.
The Economic Secretary is building a case on the presence or absence of hon. Members in the Chamber. Where, then, are the Chancellor and the Prime Minister?

Mrs. Liddell: Running the country.
The hon. Gentleman made a number of points— [Interruption.] I wish my hon. Friends would stop making me laugh. [Interruption.]

Mr. Deputy Speaker: Order. Perhaps we can now return to the contents of the Finance Bill.

Mrs. Liddell: I am happy to do so, Mr. Deputy Speaker.
We have observed some interesting gyrations on the part of the Opposition Front Bench. I am not just talking about the fact that no Opposition Front Bencher managed to stay in the Chamber throughout the debate; during the Bill's passage, we have seen a radical reversal of the Opposition's views on capital gains tax. Moreover, as my hon. Friends have pointed out, the Opposition have tabled amendments whose cost would total around £7 billion, and have given no explanation of where they would find the money to finance them. Which taxes would they increase? Which public expenditure would they cut? As my right hon. Friend the Chief Secretary said the other night, the Conservatives are beginning to beat the Liberals Democrats in terms of imprudent economics.
There has been a challenge to a number of our measures—important measures, aimed at making the tax system fairer. For example, Opposition Members tabled an amendment seeking to exempt from tax people working overseas and earning salaries of at least £87,000 a year. I recognise that that may not be a great deal of money for those with extensive outside interests, but, believe me, it is a lot of money from my constituents' point of view.
There was an entirely spurious attempt to focus debate on the number and scope of regulation-making powers, rather than on the important measures in the Bill. Throughout our consideration of the Bill, spurious arguments have been advanced, often on behalf of "special interest" groups. That, I think, is a measure of how ineffective the Opposition were in the task of opposing: they ran out of steam before we could even complete Third Reading.
I contend that one reason for the exodus from the Chamber this evening is the fact that the scale of revulsion in the country at the economic policies that the Conservatives pursued in opposition is beginning to dawn on them. The last time I saw the Opposition Benches so empty, Conservative Members were off looking for another leader. Perhaps that is what is happening now. [Interruption.] As my hon. Friend the Member for Coventry, North-East (Mr. Ainsworth) has just pointed out, perhaps they are off looking for work. A number of Conservatives had to do that after 1 May last year.
Let me now deal with what was said by the hon. Member for Banff and Buchan. The other day, his party's Treasury spokesman was interviewed on BBC Radio Scotland. When asked about his party's economic policies, he said that industry would have to hope for the best. That is the "fingers crossed" school of economics: the emblem of the Scottish National party should be a lucky bunch of white heather.
In one of the interventions to which we have become so used during our debates on the Bill—an intervention of great erudition—my hon. Friend the Member for Dudley, North (Mr. Cranston) took the hon. Gentleman's arguments on manufacturing apart—but, predictably, the hon. Gentleman was not present to hear him. Nor, having referred to the importance of the service industries in Scotland, was he present to hear my hon. Friend the Member for Paisley, South (Mr. Alexander) draw attention to the attack on those industries—especially the financial services industry—that had been launched by the Scottish National party in the past fortnight. Fortunately, Labour Members do not go in for that kind of behaviour.
My hon. Friend the Member for Paisley, South made a good point about the money that the Government have set aside for the university for industry. May I also remind the House of the £50 million that has been made available in the Budget for the university challenge fund? My hon. Friend's constituency contains the university of Paisley, which is known for its ability to convert research ideas into development projects that make a considerable amount of money for the Scottish economy. I am sure that he and his constituents will benefit greatly from that.
We heard some interesting contributions from the Liberal Democrats. The Liberal Democrats were a constant source of entertainment to us in Committee. In Committee, we had an opportunity to congratulate the hon. Member for Gordon (Mr. Bruce) on his wedding and his honeymoon, but I am not sure that the hon. Member for Kingston and Surbiton (Mr. Davey) had the same excuse for not being present. Tonight he raised the issue of insurance premium tax, although earlier he had had the opportunity to speak to an amendment on the subject but was not present to do so. In Committee, he failed to vote against a measure that he has described as reprehensible. He has also sought, at this late stage, to introduce a measure that would undermine an important anti-avoidance provision in the Bill. Labour Members do not find that acceptable. The insurance premium tax rate is designed to ensure that there is neither the incentive nor the scope for VAT avoidance.
It is unfortunate that the hon. Gentleman and his hon. Friends did not get their act together sufficiently to allow debate on these matters. It would have been illuminating for people outside to see the extent to which the Liberal Democrats are not prepared to pursue anti-avoidance measures. Like many of their proposals, the proposal of which the hon. Gentleman spoke tonight would have cost the country a good deal of money—more than £400 million. It is a case of spend, spend, spend—and at no point are we given any indication of how the Liberal Democrats would put the economy on to the stable basis that is required for long-term good. [Interruption.]
The hon. and learned Member for Orkney and Shetland (Mr. Wallace) who has not taken enough interest in the Bill to participate in the debate—we are becoming accustomed to such behaviour from Liberal Democrat Members—refers, from a sedentary position, to closures and redundancies in the economy. The hon. Gentleman would be better placed to make such remarks if he were prepared to engage in coherent economic argument about how we can improve our economy. The Bill is another step towards ensuring that the country moves into a climate of economic stability that will provide sustainable growth, and allow businesses and households to plan for the future.
We have had 18 years of boom and bust. We have had 18 years of economic incompetence. Anyone who wants to see the scale of that incompetence need only read the Hansard reports of debates on past Finance Bills, which will reveal some of the weakest and most spurious arguments ever advanced in the House.
The Budget that we have introduced is a Budget for fairness. At last we have a Government who are committed to fairness for all. As a consequence of this Budget, the least advantaged members of society will be given extra assistance. Those who seek to create wealth will find themselves in a climate that will allow them,

not just to develop their own businesses, but to bring about an atmosphere that will enable our economy to thrive.
This is a Budget from a Government who look forward rather than back. I repeat that it is a Budget for the many, not the few. That is the sea change that has been created; that is the difference between this Government and the Government who went before.
I am proud of what was done by my hon. Friends in Committee, and am grateful for the support that they have given the Financial Secretary, the Paymaster General and me. I am also grateful to all who the Member for Halton (Mr. Twigg) have taken the message of this Budget to men and women the Member for Halton (Mr. Twigg) throughout the country. Earlier, my hon. Friend the Member for Halton (Mr. Twigg) said that people had stopped him in the street to congratulate the Government on the Budget. That happened to me, too. [Interruption.] The cackles of the Opposition prove that their arrogance is undiminished. Their lack of understanding of the ordinary people of the United Kingdom has not advanced at all. Tonight sees the completion of an important stage in the Government's programme. I commend the Bill to the House with great pride.

Question put, That the Bill be now read the Third time:-

The House divided: Ayes 308, Noes 171.

Division No. 322]
[8.9 pm


AYES


Adams, Mrs Irene (Paisley N)
Cawsey, Ian


Ainger, Nick
Chapman, Ben (Wirral S)


Ainsworth, Robert (Cov'try NE)
Chaytor, David


Alexander, Douglas
Chisholm, Malcolm


Allen, Graham
Church, Ms Judith


Anderson, Donald (Swansea E)
Clapham, Michael


Anderson, Janet (Rossendale)
Clark, Rt Hon Dr David (S Shields)


Armstrong, Ms Hilary
Clark, Dr Lynda (Edinburgh Pentlands)


Ashton, Joe



Atkins. Charlotte
Clark, Paul (Gillingham)


Austin, John
Clarke, Charles (Norwich S)


Banks, Tony
Clarke. Tony (Northampton S)


Battle, John
Clelland, David


Bayley, Hugh
Clwyd, Ann


Beard, Nigel
Coffey, Ms Ann


Beckett, Rt Hon Mrs Margaret
Cohen, Harry


Benn, Rt Hon Tony
Coleman, Iain


Bennett, Andrew F
Colman, Tony


Bermingham, Gerald
Connarty, Michael


Berry, Roger
Cook, Frank (Stockton N)


Betts, Clive
Corbyn, Jeremy


Blackman, Liz
Corston, Ms Jean


Blears, Ms Hazel
Cousins, Jim


Blizzard, Bob
Cranston, Ross


Blunkett, Rt Hon David
Crausby, David


Boateng, Paul
Cummings, John


Borrow, David
Cunningham, Jim (Cov'try S)


Bradley, Keith (Withington)
Dalyell, Tam


Bradley, Peter (The Wrekin)
Darling, Rt Hon Alistair


Brinton, Mrs Helen
Darvill, Keith


Brown, Rt Hon Nick (Newcastle E)
Davey, Valerie (Bristol W)


Brown, Russell (Dumfries)
Davidson, Ian


Browne, Desmond
Davies, Rt Hon Denzil (Llanelli)


Buck, Ms Karen
Davies, Rt Hon Ron (Caerphilly)


Burden, Richard
Davis, Terry (B'ham Hodge H)


Burgon, Colin
Dawson, Hilton


Byers, Stephen
Dean, Mrs Janet


Campbell, Alan (Tynemouth)
Denham, John


Campbell, Mrs Anne (C'bridge)
Dewar, Rt Hon Donald


Canavan, Dennis
Dobbin, Jim


Cann, Jamie
Dobson, Rt Hon Frank






Donohoe, Brian H
Kidney, David


Doran, Frank
Kilfoyle, Peter


Dowd, Jim
King, Andy (Rugby  Kenilworth)


Drew, David
King, Ms Oona (Bethnal Green)


Edwards, Huw
Ladyman, Dr Stephen


Ellman, Mrs Louise
Lawrence, Ms Jackie


Ennis, Jeff
Laxton, Bob


Etherington, Bill
Lepper, David


Field, Rt Hon Frank
Leslie, Christopher


Fisher, Mark
Lewis, Terry (Worsley)


Flint, Caroline
Liddell, Mrs Helen


Flynn, Paul
Linton, Martin


Follett, Barbara
Livingstone, Ken


Foster, Rt Hon Derek
Lloyd, Tony (Manchester C)


Foster, Michael Jabez (Hastings)
Lock, David


Foster, Michael J (Worcester)
Love, Andrew


Galbraith, Sam
McAllion, John


Galloway, George
McAvoy, Thomas


Gardiner, Barry
McCabe, Steve


George, Bruce (Walsall S)
McCafferty, Ms Chris


Gibson, Dr Ian
McCartney, Ian (Makerfield)


Gilroy, Mrs Linda
McDonagh, Siobhain


Godman, Dr Norman A
Macdonald, Calum


Goggins, Paul
McDonnell, John


Golding, Mrs Llin
McGuire, Mrs Anne


Gordon, Mrs Eileen
McIsaac, Shona


Griffiths, Jane (Reading E)
McKenna, Mrs Rosemary


Griffiths, Nigel (Edinburgh S)
Mackinlay, Andrew


Griffiths, Win (Bridgend)
McLeish, Henry


Grocott, Bruce
McNulty, Tony


Grogan, John
MacShane, Denis


Gunnell, John
Mactaggart, Fiona


Hain, Peter
Mahon, Mrs Alice


Hall, Mike (Weaver Vale)
Mallaber, Judy


Hall, Patrick (Bedford)
Mandelson, Peter


Hamilton, Fabian (Leeds NE)
Marsden, Gordon (Blackpool S)


Hanson, David
Marsden, Paul (Shrewsbury)


Harman, Rt Hon Ms Harriet
Marshall, David (Shettleston)


Heal, Mrs Sylvia
Marshall-Andrews, Robert


Henderson, Doug (Newcastle N)
Martlew, Eric


Heppell, John
Meale, Alan


Hewitt, Ms Patricia
Merron, Gillian


Hill, Keith
Michael, Alun


Hinchliffe, David
Milburn, Alan


Hodge, Ms Margaret
Miller, Andrew


Hoey, Kate
Mitchell, Austin


Home Robertson, John
Moffatt, Laura


Hoon, Geoffrey
Moran, Ms Margaret


Hope, Phil
Morgan, Ms Julie (Cardiff N)


Howarth, Alan (Newport E)
Morgan, Rhodri (Cardiff W)


Howarth, George (Knowsley N)
Morris, Ms Estelle (B'ham Yardley)


Hoyle, Lindsay
Morris, Rt Hon John (Aberavon)


Hughes, Ms Beverley (Stretford)
Mowlam, Rt Hon Marjorie


Hughes, Kevin (Doncaster N)
Mudie, George


Humble, Mrs Joan
Mullin, Chris


Hutton, John
Murphy, Jim (Eastwood)


Iddon, Dr Brian
Naysmith, Dr Doug


Illsley, Eric
O'Brien, Bill (Normanton)


Jackson, Ms Glenda (Hampstead)
O'Brien, Mike (N Warks)


Jackson, Helen (Hillsborough)
Olner, Bill


Jamieson, David
O'Neill, Martin


Jenkins, Brian
Organ, Mrs Diana


Johnson, Miss Melanie (Welwyn Hatfield)
Osborne, Ms Sandra



Palmer, Dr Nick


Jones, Mrs Fiona (Newark)
Pearson, Ian


Jones, Helen (Warrington N)
Pendry, Tom


Jones, Jon Owen (Cardiff C)
Pickthall, Colin


Jones, Dr Lynne (Selly Oak)
Pike, Peter L


Jones, Martyn (Clwyd S)
Plaskitt, James


Jowell, Ms Tessa
Pollard, Kerry


Kaufman, Rt Hon Gerald
Powell, Sir Raymond


Keeble, Ms Sally
Prentice, Ms Bridget (Lewisham E)


Keen, Alan (Feltham  Heston)
Prentice, Gordon (Pendle)


Keen, Ann (Brentford  Isleworth)
Primarolo, Dawn


Kennedy, Jane (Wavertree)
Prosser, Gwyn


Khabra, Piara S
Purchase, Ken





Quin, Ms Joyce
Strang, Rt Hon Dr Gavin


Quinn, Lawrie
Straw, Rt Hon Jack


Radice, Giles
Stringer, Graham


Rammell, Bill
Stuart, Ms Gisela


Rapson, Syd
Sutcliffe, Gerry


Reed, Andrew (Loughborough)
Taylor, Rt Hon Mrs Ann (Dewsbury)


Reid, Dr John (Hamilton N)



Robertson, Rt Hon George (Hamilton S)
Taylor, Ms Dari (Stockton S)



Taylor, David (NW Leics)


Robinson, Geoffrey (Cov'try NW)
Thomas, Gareth R (Harrow W)


Roche, Mrs Barbara
Timms, Stephen


Rooney, Terry
Tipping, Paddy


Ross, Ernie (Dundee W)
Todd, Mark


Rowlands, Ted
Touhig, Don


Roy, Frank
Trickett, Jon


Ruddock, Ms Joan
Truswell, Paul


Russell, Ms Christine (Chester)
Turner, Dennis (Wolverh'ton SE)


Ryan, Ms Joan
Turner, Dr Desmond (Kemptown)


Salter, Martin
Turner, Dr George (NW Norfolk)


Savidge, Malcolm
Twigg, Derek (Halton)


Sawford, Phil
Vis, Dr Rudi


Sedgemore, Brian
Walley, Ms Joan


Shaw, Jonathan
Ward, Ms Claire


Sheerman, Barry
Wareing, Robert N


Sheldon, Rt Hon Robert
Watts, David


Short, Rt Hon Clare
White, Brian


Simpson, Alan (Nottingham S)
Whitehead, Dr Alan


Singh, Marsha
Wicks, Malcolm


Skinner, Dennis
Williams, Rt Hon Alan (Swansea W)


Smith, Rt Hon Andrew (Oxford E)



Smith, Angela (Basildon)
Williams, Alan W (E Carmarthen)


Smith, Miss Geraldine (Morecambe  Lunesdale)
Wills, Michael



Wilson, Brian


Smith, Llew (Blaenau Gwent)
Winterton, Ms Rosie (Doncaster C)


Southworth, Ms Helen
Wood, Mike


Spellar, John
Worthington, Tony


Squire, Ms Rachel
Wright, Anthony D (Gt Yarmouth)


Stevenson, George
Wyatt, Derek


Stewart, Ian (Eccles)



Stinchcombe, Paul
Tellers for the Ayes:


Stoate, Dr Howard
Mr. John McFall and


Stott, Roger
Mr. Greg Pope.


NOES


Allan, Richard
Collins, Tim


Amess, David
Cotter, Brian


Ancram, Rt Hon Michael
Cran, James


Arbuthnot, James
Dafis, Cynog


Ashdown, Rt Hon Paddy
Davey, Edward (Kingston)


Atkinson, David (Bour'mth E)
Davis, Rt Hon David (Haltemprice)


Atkinson, Peter (Hexham)
Donaldson, Jeffrey


Baker, Norman
Dorrell, Rt Hon Stephen


Ballard, Jackie
Duncan Smith, Iain


Beggs, Roy
Evans, Nigel


Bercow, John
Ewing, Mrs Margaret


Beresford, Sir Paul
Faber, David


Body, Sir Richard
Fallon, Michael


Boswell, Tim
Fearn, Ronnie


Bottomley, Peter (Worthing W)
Flight, Howard


Brady, Graham
Forth, Rt Hon Eric


Brake, Tom
Foster, Don (Bath)


Brand, Dr Peter
Fox, Dr Liam


Brazier, Julian
Fraser, Christopher


Brooke, Rt Hon Peter
Garnier, Edward


Browning, Mrs Angela
George, Andrew (St Ives)


Bruce, Ian (S Dorset)
Gibb, Nick


Bruce, Malcolm (Gordon)
Gill, Christopher


Burnett, John
Gorman, Mrs Teresa


Burns, Simon
Gorrie, Donald


Burstow, Paul
Gray, James


Campbell, Menzies (NE Fife)
Green, Damian


Chapman, Sir Sydney (Chipping Barnet)
Greenway, John



Grieve, Dominic


Clappison, James
Hamilton, Rt Hon Sir Archie


Clark, Rt Hon Alan (Kensington)
Hancock, Mike


Clifton-Brown, Geoffrey
Harris, Dr Evan






Harvey, Nick
Paterson, Owen


Hawkins, Nick
Pickles, Eric


Hayes, John
Prior, David


Heald, Oliver
Randall, John


Heath, David (Somerton  Frome)
Redwood, Rt Hon John


Heathcoat-Amory, Rt Hon David
Rendel, David


Hogg, Rt Hon Douglas
Robathan, Andrew


Horam, John
Robertson, Laurence (Tewk'b'ry)


Hughes, Simon (Southwark N)
Roe, Mrs Marion (Broxbourne)


Hunter, Andrew
Ross, William (E Lond'y)


Jack, Rt Hon Michael
Rowe, Andrew (Faversham)


Jackson, Robert (Wantage)
Ruffley, David


Jenkin, Bernard
Russell, Bob (Colchester)


Johnson Smith, Rt Hon Sir Geoffrey
St Aubyn, Nick



Salmond, Alex


Jones, Ieuan Wyn (Ynys Môn)
Sanders, Adrian


Jones, Nigel (Cheltenham)
Shephard, Rt Hon Mrs Gillian


Keetch, Paul
Shepherd, Richard


Kennedy, Charles (Ross Skye)
Simpson, Keith (Mid-Norfolk)


Key, Robert
Smith, Sir Robert (W Ab'd'ns)


Kirkbride, Miss Julie
Soames, Nicholas


Kirkwood, Archy
Spelman, Mrs Caroline


Laing, Mrs Eleanor
Spicer, Sir Michael


Lait, Mrs Jacqui
Stanley, Rt Hon Sir John


Lansley, Andrew
Streeter, Gary


Leigh, Edward
Stunell, Andrew


Letwin, Oliver
Swayne, Desmond


Lewis, Dr Julian (New Forest E)
Syms, Robert


Lidington, David
Tapsell, Sir Peter


Livsey, Richard
Taylor, John M (Solihull)


Lloyd, Rt Hon Sir Peter (Fareham)
Taylor, Matthew (Truro)


Llwyd, Elfyn
Taylor, Sir Teddy


Loughton, Tim
Thompson, William


Luff, Peter
Tonge, Dr Jenny


MacGregor, Rt Hon John
Townend, John


Mackay Andrew
Trend, Michael


Maclean, Rt Hon David
Tyler, Paul


Maclennan, Rt Hon Robert
Tyrie, Andrew


McLoughlin, Patrick
Wallace, James


Madel, Sir David
Walter, Robert


Malin, Humfrey
Wardle, Charles


Maples, John
Webb, Steve


Maude, Rt Hon Francis
Wells, Bowen


Mawhinney, Rt Hon Sir Brian
Welsh, Andrew


May, Mrs Theresa
Whittingdale, John


Michie, Mrs Ray (Argyll  Bute)
Wilkinson, John


Moore, Michael
Willetts, David


Morgan, Alasdair (Galloway)
Willis, Phil


Moss, Malcolm
Wilshire, David


Nicholls, Patrick
Winterton, Mrs Ann (Congleton)


Norman, Archie
Winterton, Nicholas (Macclesfield)


Oaten, Mark
Woodward, Shaun


Öpik, Lembit
Yeo, Tim


Ottaway, Richard



Page, Richard
Tellers for the Noes:


Paice, James
Mr. Nigel Waterson and



Mr. Stephen Day.

Question accordingly agreed to.

Bill read the Third time, and passed.

Orders of the Day — Teaching and Higher Education Bill [Lords]

Lords amendment considered.

Clause 19

NEW ARRANGEMENTS FOR GIVING FINANCIAL SUPPORT TO STUDENTS

The Minister for Education and Industry, Scottish Office (Mr. Brian Wilson): I beg to move,
That this House insists on its amendment in page 14, to leave out lines 31 to 49, to which the Lords have disagreed and disagrees to the amendment proposed by the Lords in lieu of that amendment.

Mr. Deputy Speaker (Mr. Michael Lord): With this, it will be convenient to discuss motion No. 2:-
That this House insists on its amendment in page 22, to leave out lines 31 to 39, to which the Lords have disagreed.
I inform the House that the Lords disagreement to the two Commons amendments and the Lords amendment in lieu involve privilege.

Mr. Wilson: The motions invite the House to insist on two amendments that it made earlier, thereby deleting two amendments carried in another place.
I return to this subject with enthusiasm. I am delighted again to have the opportunity to state the purposes of the funding changes for higher education, which are simply to widen access to it and get more money into it. As I have acknowledged at the Dispatch Box before, the Tories were good at getting the numbers in. No one criticises them for that, although they might be criticised for their motives or the haphazard way it was done. They substantially increased the numbers in higher education, but they did not put the money in to follow the students and thereby maintain the standards of higher education and research on which this country depends for its economic future. That is the inheritance which the Government are addressing. We are determined not to be distracted from it.
We invite the House to reverse the Lords amendments, because we are not going to accept changes to the legislation, under any guise or subterfuge, that will eat away at the considerable sums of money that will be available to higher education as a result of the Bill and the Government's courage in facing up to the funding shortfall in higher education.
Whatever the reservations of principals, or anyone else, on the issues that we are discussing, they, too, recognise the need for the reforms to get additional money into their universities. Faced with the chaos that the Opposition parties seek to visit on the legislation or the certainty of additional funding as a result of the Bill, there is not the slightest doubt that anyone in the academic community would accept that the Bill is good for higher education. Any dilution of the funds available to it as a result of the Lords amendments would be bad news for them, for their institutions and, most important, for the next generation of students in higher education.
On consideration of the amendments, the Lords insisted on their original amendments returning to this House. The proposed alternative to the original amendment No. 64 is


in a slightly different form, but that does not make it any more acceptable. I repeat what my hon. Friends and I have said many times before. We oppose such amendments not only because of the financial arguments that I have adduced but because they aim to prevent the Government from making provision for financial assistance with fees that takes into account the indisputable diversity of the education systems in different parts of the United Kingdom.

Mr. Tam Dalyell: What legal advice in relation to a case that may be tested in the European Court has either the Secretary of State for Education and Employment, whose presence we welcome, or Scottish Office Ministers had on their proposals? Are they absolutely sure that it is legally watertight?

Mr. Wilson: As an honorary graduate in science of Edinburgh university, my hon. Friend will understand the dangers of the words "absolute" and "certainty". Within those parameters, it is self-evident that we would not have promoted the legislation if the legal advice was not firmly in favour of it in all its aspects.

Mr. Ian Bruce: Will the Minister give way?

Mr. Wilson: No.
The central charge of our critics in this matter is that the Bill creates an inequity in the United Kingdom. I want at the outset to say that the precise opposite is the truth. By following to the letter the recommendations of the Dearing and Garrick committees—I remind the Conservatives that they established them—we have created equality of opportunity for every student to study for an honours degree while contributing no more than £3,000 in tuition fees, if they are liable at all for them. That is the equity that Dearing and Garrick asked for and what we have delivered.

Mr. David Willetts: Does the Minister accept that the Dearing report said that maintenance grants could stay? If Ministers are to claim the Dearing report in aid why do they not implement it?

Mr. Wilson: If we implemented Dearing, every student would pay £1,000 a year in tuition fees. [Interruption.] Barracking will not win this argument, I assure hon. Members. We accepted the principle, as I believe everyone does, that in order to have a well-funded higher education system, it was necessary that those who benefited from it directly made some contribution to it. We decided that it was right to exempt those from households on below average incomes from tuition fees. We did that to protect those from less well-off backgrounds in accordance with our central aim of widening access to higher education.
As the hon. Member for Havant (Mr. Willetts) is well aware, this debate is not a reopening of the debate on funding. It is specifically on the Lords amendments. The unpalatable truth which I have offered him is that the Dearing and Garrick committees set up by the previous Administration made a specific recommendation. We

looked at the issue of fairness and we have come up with exactly what Dearing and Garrick came up with. If the hon. Gentleman looks at the Division lists from the Lords debate last week, it may interest him to see where the name of Lord Dearing is positioned. Lord Dearing understands the arguments with which we are dealing tonight and is not interested in the political argy-bargy. The specific point about fairness is addressed in the amendments.

Mr. Andrew Welsh: Will the Minister give way?

Mr. Wilson: In a little while.
The Dearing committee recommended that we address fully what some people rather improbably describe as the Scottish anomaly, but I describe as the distinctive character of the Scottish education system, which we shall defend. It is not, need never be and should never be identical to the English one. It is based on different school qualifications. It is a different higher education system, and that is exactly what we intend to maintain.
The point of fairness with which the House should be concerned tonight is simple. The normal Scottish route to an honours degree at a Scottish university is a four-year course. It is a broadly based higher education system which fits a broadly based school system. The qualifications and the time scale for achieving them flow from the school system. The Dearing-Garrick recommendation has been met in full. Scottish students should not pay more for their normal route to an honours degree than students in other parts of the United Kingdom. That is the central point of fairness, and it has been addressed.

Mr. Welsh: I heard the Minister say that he was following the Dearing report to the letter. Had he done so, he would have maintained student grants. Just in case Hansard magically gets altered, can the Minister explain that? Or is he cherry-picking? He rightly praises the Scottish four-year degree, but in this House he called it a bogus tradition. He seems to be all over the place on this. Why does he not restore fairness by abolishing the anomaly and getting rid of the discretion against English students? If he followed Dearing to the letter, he would not have abolished grants.

Mr. Wilson: The hon. Gentleman should not talk about cherry-picking, unless he is following Dearing to the letter, in which case he will advocate that every student, irrespective of family income, should pay £1,000 a year in tuition fees. If that is the new policy of the Scottish National party, he is welcome to tell us, but if he is not telling us that, why is he talking about cherry-picking? The hon. Gentleman is revisiting the general point.
I have said clearly that we did not accept the idea of £1,000 per student per year, irrespective of income. We think that that would be inequitable. The hon. Gentleman may disagree with us, but we want to widen access and ensure that people from less well-off backgrounds do not pay tuition fees. As I pointed out to the hon. Member for Havant, the specific point is the Lords amendment and the question of fourth-year tuition fees. On that point, we are following Dearing and Garrick to the letter.

Several hon. Members: rose—

Mr. Wilson: I will not give way.
Dearing and Garrick said nothing about the same concession for students from other parts of the United Kingdom who opt for the longer Scottish honours courses, with which their qualifications do not easily interface. Such students have always chosen to accept higher costs by choosing, as is their perfect right, the longer Scottish honours degree courses. They accept the additional maintenance costs that are obviously entailed in a four-year, as opposed to a three-year, course. They also choose to forgo a year of earnings. They are welcome to make that choice. They are an extremely valuable part of the Scottish higher education system, but they make their choice in the full knowledge that they are going into a longer course which entails higher cost.

Mr. Graham Brady: Does the Minister accept that, over the years, English students in many parts of the country have made a choice to opt for a more expensive form of study by going to London, and that the state has properly recognised the additional cost and helped them to study in London? That is different from the example that he is setting forward, in which the state penalises students who choose a more expensive form of study.

Mr. Wilson: If the hon. Gentleman is referring to maintenance costs for students in London, I think that is an interesting issue, but not the one that we are discussing tonight. [Laughter.] With respect, we are not discussing a principle. We are not having an academic debate. We are discussing specific Lords amendments that deal with the one issue of the four-year degree in Scotland and—I shall come to this in a moment—the rest of the United Kingdom.

Mr. Ian Bruce: Will the Minister give way?

Mr. Wilson: I will not give way. Perhaps if things are dull later, we can have some fun, but for the moment I will not give way.
If people went for a four-year honours degree course, they were of course going to be involved in greater costs than if they studied in other parts of the United Kingdom and did a three-year course. It is simply not credible—this is where the dishonesty lies in the argument—that the levying of fourth-year tuition fees on a means-tested basis will be a decisive factor in determining whether students go to a Scottish university.

Judy Mallaber: Do the figures on take-up which we have so far show any evidence that English and Welsh students have been disproportionately put off applying to Scottish universities? What are the proportionate changes for Scottish, England and Welsh student applications and for applications from the European Union?

Mr. Wilson: I can give my hon. Friend all the figures, but she makes the point in her question. There is not a shred of statistical evidence to suggest that the effect that has been predicted or wished for by Opposition Members is happening. To take one statistic, there are 33,000 applications from the rest of the United Kingdom to Scottish universities, compared to 27,000 from within Scotland. There is a proportionate increase in applications to Scottish universities from England and a numerical and

proportionate increase in applications from Wales. Where is the evidence in any of that of the effect that hon. Members suggest?

Mr. Dennis Canavan: Perhaps I can be of assistance to my hon. Friend by giving him statistics that come straight from the Universities and Colleges Admission Service. Applications to Scottish universities are down 4.5 per cent. from last year. Applications to Scottish universities from England are down 4.1 per cent. and those from Northern Ireland are down 5.5 per cent.

Mr. Wilson: Characteristically, my hon. Friend quotes helpful figures. They show that the very modest increase from England is substantially less than the cross-border flow. We have said that there is a proportionate increase in applications from Scotland of people wishing to go to England, and a numerical increase in applications from Wales. There is a decrease in the number of people going from Scotland to English universities. If the logic of the Opposition's argument has anything to commend it, they will have to explain why there is a decrease, rather greater in numerical terms, in the number going from Scotland to England. People are clearly not deterred by fourth-year tuition fees, and it is nonsense to suggest that they will deter people. All the statistics refute the Opposition's case.

Mr. Simon Hughes: Perhaps I could put a specific case. My dad and my granddad were brewers, and at one time the only United Kingdom university offering a brewing degree was Heriot-Watt. If a specific degree course is available only in a Scottish university, as may happen now or in future, why should an English, Welsh or Northern Irish student who wants to follow a perfectly proper degree course have to pay more than if the same course were on offer in an English, Welsh or Northern Irish university?

Mr. Wilson: It is all part of choice. The hon. Gentleman's grandfather chose to be a brewer. That was commendable, but it was a choice. I do not know the hon. Gentleman's antecedents but, given his mode of transport today, I assume that he has fairly humble origins. Some 40 per cent. of students in Scottish universities, from whichever part of the United Kingdom they come, will pay nothing at all in tuition fees. Perhaps the family brewing empire would have been able to start unhindered under these arrangements.

Mr. Ian Bruce: The Minister opened the debate on a note on which we could all agree when he said that Government policy should always be to get more people into university. The Minister has had a long plane trip from Scotland and I am sure that the House is grateful to him for turning up. Surely he knows that, next year, the number of people who will go to university will be down for the first time. Surely he realises that Government policy is wrong. He should correct it by accepting the Lords amendments.

Mr. Wilson: Rarely has a man waited so long to say so little, and the hon. Gentleman is wrong. We have applications, but we do not have admissions. Scottish universities could be filled several times over with current applicants, and there are more applications from the rest


of the United Kingdom than from Scotland. We think that we have the right policy to get more money into higher education, and the next part of our job in overcoming Opposition misinformation is to make sure that potential students have access to accurate information and that applications are turned into admissions. We shall do exactly that.
Let us look at the figures and put the issue in perspective. There are many problems and challenges in education. There is a need to get more money in, to open up opportunities and to ensure that the 11 per cent. of people from lower-income backgrounds in higher education is brought nearer to the 80-plus per cent. of the top two social groups. Those are important issues, and I should have liked to hear the other place discuss them. It did not. It has not sent us a demand for more egalitarianism or more opportunity in education. There is not a word about that. The narrow issue affects a small number of people and has an influential pressure group made up of a small number—I might say a minority—of university principals who have the ear of some people in the House of Lords and in the Opposition. That is why the issue has been elevated to a high point of principle, which it is not.
On the basis of last year's admissions, about 6,000 students will come from the rest of the United Kingdom to Scottish universities. I have no doubt that there were 6,000 last year, and that there will be 6,000 next year when all the got-up excitement will be forgotten. The numbers will not change significantly, and between a third and 40 per cent. of those students will pay nothing in tuition fees and will be completely unaffected by the argument, except in the sense that they might be misled by Opposition Members into believing that they will pay tuition fees.

Mr. John Randall: rose—

Mr. Wilson: I am trying to give a breakdown of the figures, but if the hon. Gentleman cannot contain himself I shall give way.

Mr. Randall: I am grateful to the Minister for his courtesy.
The Minister says that a small number of people discussed the issue in the other place. Why were there no Scottish Members on the Standing Committee from the Labour party, the Liberal Democrat party or the Scottish National party? I agree that Conservative Members are at a disadvantage. However, it would have been nice if some Scottish Members had debated these issues.

Mr. Wilson: The Committee's make-up is a matter for the Committee of Selection. I have no wish to cast aspersions on the minor parties. They can speak for themselves if they want. Although, in many ways, this issue affects the Department for Education and Employment more than us, whenever it has come here, it has focused on Scotland, so I have taken responsibility for answering at the Dispatch Box on the Floor of the House, and I do not shirk from that.

Several hon. Members: rose—

Mr. Wilson: I want to finish the breakdown.
A third of those students will pay nothing at all over the four years, so there is no impact. Some will pay very small amounts, because it is a means-tested system. Again, I go back to the point that anyone who thinks that that will be the decisive factor in determining whether students go to Edinburgh, St. Andrews or a university in England is not living in the real world. Many students take an honours degree and they are not affected either. There are others who enter in the second year and they are not affected either. When we take all those categories out, at most, we are talking about 1,200 students from England, who will be asked to pay £1,000 extra over the four years.
It is of interest to know where those students come from—what backgrounds they come from and whether this is likely to be a burden on their shoulders, which will be crucial in determining the outcome—so I made some inquiries into the top four schools supplying students to Edinburgh and St. Andrews universities. My hon. Friends should listen to this point, because they will get some idea. They will be listening anxiously for schools in their constituency to find out if it is their constituents who will be affected.
The pecking order of schools supplying students from England to Edinburgh and St. Andrews universities is: No. 1, Eton college; No. 2, Wellington college; No. 3, Charterhouse; and, No. 4, Westminster school. That tells us something about the wonderful, egalitarian education system that we have in Scotland. There is only one school in Scotland that sends more pupils to Edinburgh and St. Andrews universities combined than Eton college: George Watson's college in Edinburgh. If that is an egalitarian system, which we have to defend in the Division Lobby tonight, I want no part of that defence.

Mr. Alex Salmond: Presumably, the Minister would not apply those questions on social class to students from Northern Ireland, who will be discriminated against on his position.
The Minister said earlier that he wanted to defend the four-year degree, except that, at column 794 on 8 June, he described it as a "bogus tradition", so will he tell the House: what is it? Is he intent on defending the four-year honours degree, or does he still regard it as a "bogus tradition", as he did last month?

Mr. Wilson: That is a characteristic sleight of syntax, because I did not describe the four-year degree as bogus. I know exactly what I said because I saw the glow of excitement on the hon. Gentleman's face when I said it. I will recap what I said—it goes back into the general debate, but I am happy to recap.
When I and, I suspect, the hon. Gentleman went to university, a relatively small minority of Scottish school leavers who went to university did honours degrees. If I remember rightly, roughly 30 per cent. did four-year honours degrees and 70 per cent. did ordinary degrees. In the interim, that has turned around, so that 70 per cent. do honours degrees over four years and a small minority do ordinary degrees, which are then, by inference, regarded as inferior to the norm of the four-year honours degree.
What I said and stand by is that something that grows up over that relatively short period is not a tradition. It is bogus to call it a tradition, because a tradition goes back centuries, not 30 years. It is the norm of the four-year honours degree in Scotland that is not a tradition. It has grown up very recently.
Let us return to the top four schools supplying pupils to the Scottish universities: Eton college, Wellington college, Charterhouse and Westminster school. I say gently to my old and honourable Friend the Member for Linlithgow (Mr. Dalyell) that the amendments that he declared publicly that he will support tonight will help students in Eton but not in Elgin, in Wellington but not in Wallacetown, in Charterhouse but not in Chapelhall, and in Westminster but not in West Lothian. That fact should be borne in mind as the debate proceeds.

Mr. Roy Beggs: Does the Minister accept that the perception—which is held both domestically and internationally—that there is fairness and non-discrimination in the United Kingdom is not bogus? If so, how can the Government justify requiring students from Northern Ireland, England and Wales to pay £1,000 more than students from Europe? How can they justify requiring students from Northern Ireland to expend £1,000 more than students from the Irish Republic? Although I take account of the fact that there is provision for those on the lowest incomes, I am concerned that those who are just outside those bands will be greatly disadvantaged.

Mr. Wilson: In a moment, I shall deal with the European point—which, superficially, seems to be anomalous—and seek to address it.
First, however, I point out to the hon. Member for East Antrim (Mr. Beggs) that it is not only the poorest who will pay no fees. As a rule of thumb, as a norm, fees will not be paid by those with household incomes below £23,000. Moreover, for those who pay, the fees required will not leap suddenly from nothing to £1,000 a year. There will be a graduated scale, and one will have to be fairly far up in the earnings league before having to pay the full £1,000.
I stress again that anyone from Northern Ireland, like those from elsewhere, who has made the choice of doing a Scottish honours degree course—many do, and they are all extremely welcome—will take fees into account as one of a range of factors. I repeat also that people will not automatically be required to pay an additional £1,000 a year; it is a £1,000 maximum over a period of four years.
As I said—I think it was before the hon. Member for East Antrim joined the debate, but I make no point of that—there have always been extra costs. Any student from Northern Ireland who decides to do a four-year honours degree in Scotland instead of a three-year honours degree elsewhere knows that there will be an extra year of maintenance costs and a year of income forgone. He or she will take all those factors into account in making a decision.
I should like to point out one aspect of the Lords amendments that all hon. Members should understand. It is quite true that it would cost £2 million annually to meet the fees of all fourth-year students on Scottish courses from England, Wales and Northern Ireland. The sum can be dismissed as a relatively small one—although the

principle, rather than the sum, is important. However, I hope that hon. Members on both sides of the House understand that the Lords amendments would go much further and make the same provision for all United Kingdom students on four-year degree courses at institutions across the United Kingdom. Such provision would cost more than 10 times as much—about £27 million annually.
We would not have that £27 million available to put into higher education. Any hon. Member planning to vote today for the Lords amendments should do so in the full knowledge that £27 million would be taken from higher education. Where would that money go instead? It would, by definition, go to the best-off people, who would be the only ones who were required to contribute towards their children's tuition fees at the full £1,000 level. That subsidy would mean that, each and every year, there would be £27 million less in public funds for universities and colleges. The cost is significant.

Mr. Phil Willis: The Minister is dealing with an important issue. He has admitted that the £2 million that it would cost to exempt students attending Scottish universities is a moderate sum. The basis of his argument—which has changed very rapidly, and was made clear last week by the Prime Minister at Prime Minister's questions—is that the sum required to exempt more students from fees for four-year courses would cost the Government £27 million. The analysis that we have had done by the Committee of Vice-Chancellors and Principals of the Universities of the United Kingdom, which I think the Minister will agree is a reliable body and not one that panders to the Liberal Democrats, is that it would cost around £12 million, and that the Government have not discounted the tuition fees at all but presume that every student will pay £1,000 and the Government will meet that cost. That clearly is not the case, so will the Minister give an analysis of where the £27 million has suddenly come from?

Mr. Wilson: The £27 million comes proportionately from the number of students in England who are doing four-year degree courses. I have tried to break down the number affected in Scotland, and that is what would be covered by roughly £2 million, but incrementally there is a far larger number. As I understand it—this is not within my territory, but it is something that has grown up over the years—there is a much more substantial number of students doing four-year degree courses in England than perhaps had been widely appreciated, and certainly many more than are doing them in Scotland.

Mr. Willis: There are 50,000.

Mr. Wilson: I am not quite sure how the hon. Gentleman gets a multiplier that takes him to 250,000. As I said, it is 10 times more in England than in Scotland in terms of cost.

Mr. Willis: rose—

Mr. Wilson: I am happy to correspond with the hon. Gentleman if he wants to pursue the point of detail. Incidentally—

Mr. Willis: This is a serious point.

Mr. Wilson: I recognise that it is a serious point, and I shall perhaps answer it when I wind up the debate. I do


not dismiss it. I point out in passing that the Committee of Vice-Chancellors and Principals was among those who supported the introduction of tuition fees as a necessary method of getting extra money into higher education.
This debate has been largely about Scottish courses. If it were self-contained, it would be an interesting debate, but different from the one that we are having tonight. The secretary of the Committee of Scottish Higher Education Principals wrote a letter to The Scotsman last week. He was totally dismissive of and not interested in the £27 million argument—that is for someone else to worry about. He wrote:
Why does it requite comment by the English Department for Education and Employment to defend a decision which palpably discriminates against the Scottish way of doing things?
He went on to dismiss with an airy wave of the hand four-year degree courses in England which, he said:
cannot be regarded as authentic higher education at all and certainly not comparable with the first year of Scotland's distinctive four-year degree with honours.
I do not have the luxury of saying that I do not care about these folk in England doing four-year degree courses because the degrees are not worth anything. That is a ridiculous thing to say. The Government are obliged to take account of the fact that there is a UK-wide effect from the cost of this, and that the argument that prevails in Scotland is exactly the one that should prevail in the rest of the United Kingdom. In other words, it is a Unionist argument again, as opposed to a divisive one.

Mr. James Wallace: The Minister suggested that, if the issue were the £2 million that it would cost to allow English, Welsh and Northern Ireland students to study a four-year honours course at a Scottish university, therefore providing comparability, that would be a different argument. If the House accepts the Government motion, and the other place were then to vote for an amendment that would restrict it to the change that cost £2 million, what would the Government's attitude be?

Mr. Wilson: I think that I was entitled to draw it to the attention of the House that that is not what the amendment says. Anyone who is going to vote for the amendment had better understand what it says. Hypothesising about what the Lords might do is not particularly productive.
It is important to get this clear on the record: I did not say that it would be a different argument. I said that it would be an interesting debate; but it is not the one that we are having, because we are debating the amendments before us. The case for the Scottish £2 million, if you like, is founded on an educational argument as well as a financial one, which is, quite simply, that there is not a neatly interlocking set of school qualifications from England and the other parts of the United Kingdom which fit into the four-year honours degree system in Scotland. That is an educational argument; it is an argument recognised by Dearing; and it is the argument on which we found our case tonight.

Mr. Desmond Swayne: The Minister implies that the Scottish first-year course is little more than a remedial year to bring Scottish highers students up to A-level standard. That is an outrageous argument.

9 pm

Mr. Wilson: If it were a remedial year, the hon. Gentleman could probably benefit from it. Perhaps the hon. Gentleman should be left to his own devices, as I said no such thing. I quoted the secretary of the Committee of Scottish Higher Education Principals saying that the first year of a course in England could not be regarded as higher education. He was referring to England, not Scotland. I said nothing remotely resembling what the hon. Gentleman has attributed to me. The cost is significant, but the principle is equally important.
I now turn to the European dimension. Given my history on the issue, I found it surprising to have to explain to some unlikely people what devolution and subsidiarity are about and the consequences that flow from having different systems in respect of health, education and so on in different parts of the United Kingdom. Long before political devolution, Scotland has had a distinctive and different education system. In other parts of Europe, there are variations between Lander, regions and provinces, and it is clear that differences can develop within states on the basis of devolved government and administration. The simple principle that, in my view, rightly operates within the European Union is that, if citizens of other EU countries come to a part of a fellow member state—be it a region or a devolved territory—they benefit from whatever system applies within that area. However, for exactly the reasons that I have explained, EU law does not provide that internal concessions must be granted throughout the state.

Mr. Tim Boswell: On the basis of equity, will the Minister advise the House of the position of a German national who has a parental home in or whose normal place of residence is in England in relation to attendance at a Scottish university? Will he be expected to pay the extra year's tuition fees; if so, can the Minister explain to the House whether he should be treated on the same basis as an English student?

Mr. Wilson: We have all had such constituency cases at one time or another. They have to be dealt with according to their individual circumstances. It would depend on how long the individual had been resident in England and a range of other circumstances. I encounter such cases fairly frequently, as I am sure my ministerial colleagues do in England. If the hon. Gentleman wishes to draw a specific case to their attention, I am sure that my ministerial colleagues will be pleased to give him an answer.
Although the European position sounds anomalous, it is not. It applies throughout the European Union. It is the product of a union of states within which there are various forms of government and different legislatures.

Mr. Beggs: I am grateful to the Minister for giving way to me again.
The Minister will be aware that, today, the New Northern Ireland Assembly has had its first meeting; arising from it will be cross-border bodies, and much co-operation is expected. Nevertheless, there will be discrimination between students from Northern Ireland and from the Irish Republic should they be studying at Scottish universities. There will also be the council of the isles; should it make a representation to the Minister


asking for equity of treatment for students from all regions within the United Kingdom, would he accept and honour such a recommendation?

Mr. Wilson: I shall not prejudge what the council of the isles might discuss. However, before anyone recommends the system in the Republic of Ireland, they should check on the availability of student grants to the great majority of students. They should also check on the availability of student loans, which do not exist at all there. As a result, the majority of students within the Republic of Ireland have access to neither grants nor loans from the state, and that is not a desirable system for Scotland or Northern Ireland to copy.

Mrs. Angela Browning: Will the Minister clarify the means-testing of the fee for students from other parts of the European Union? What mechanisms has he arranged with other member states and what are the administrative costs likely to be?

Mr. Wilson: Those students do not have access to maintenance grants or loans.

Mrs. Browning: I am asking about fees.

Mr. Wilson: If I misunderstood the hon. Lady's point, I shall deal with it later.
The spectre of hordes of European Union students coming in while the English are deprived is held up as the great problem. Students from the rest of the European Union will not benefit from the subsidised maintenance loans which will be available to students from England, Wales, Northern Ireland and Scotland.

Mr. Willetts: rose—

Mr. Wilson: I shall not give way because I am coming to a conclusion.
The idea that European Union students will flock to Scottish universities in place of UK students is absurd. In 1995–96, there were just 350 other EU students in the fourth year of a Scottish course. This year there has been a 17 per cent. fall on last year's number of EU applicants, which is greater than the percentage fall in the overall number of applicants. The EU treaty requires member states not to discriminate on the ground of nationality against nationals of other member states on matters in the scope of the treaty, but it does not require each member state to treat all its nationals in the same way. That is what devolution and subsidiarity are about. I find it odd that the principles should be attacked by people who otherwise support them.
I do not want to detain the House further. This is an interesting debate, but it is peripheral to the main issues.

Mr. Wallace: There are two motions for debate. The second says:
That this House insists on its amendment in page 22, to leave out lines 31 to 39, to which the Lords have disagreed.
That specifically relates to English, Welsh and Northern Ireland students attending Scottish higher education institutions. The Minister said that that might be a

different debate, but it is relevant to the amendments. What will be the Government's policy if there is a separate vote on that motion?

Mr. Wilson: I may be dreaming, but I think that I answered that question five minutes ago. I said that it was a different debate, but the same principle. We have made it clear from the start that we oppose extending the provision to students from the rest of the United Kingdom, not primarily—or not entirely—on financial grounds. There is an educational argument. We believe that it is not right to extend that benefit to students who have chosen a degree course in Scotland against the many other options open to them. We do not believe that it will have any impact on the number of English students in Scottish universities. I reiterate the point that, if any Scottish university is worried about not having enough students from England, it need only take a few students from less well-off backgrounds. That will keep the numbers and the quality up.

Mr. Beggs: Will the Minister give way?

Mr. Wilson: No. I have given way twice to the hon. Gentleman.
We are debating a peripheral aspect of the Bill. The Bill is about getting more money into higher education, putting £140 million extra a year into Scottish higher and further education alone. That is a big aim. The quality of our education system depends on it. If we are frustrated or diverted from our aim, it will not be this House that pays the penalty, but the students of the next generation, the research base of the Scottish universities and, in particular, those universities that depend on the widest possible range of students and the widest range of access to their ranks. For all those reasons, I ask my hon. Friends and Opposition Members who think about the issues to vote to overturn the Lords amendments. As we would expect from the House of Lords, the amendments are in the interests of an elite and do not address the needs of higher education.

Mr. Willetts: The longer the Minister's speech went on, the feebler his arguments became. It was a completely unnecessary speech, on a completely unnecessary measure. The Government have got what they asked for when the Secretary of State for Education and Employment made his statement on higher education almost a year ago. In every essential respect, the Bill before the House delivers what he announced. It is not the purpose of this debate to go into the strong disagreements in Committee—suffice it to say that the Secretary of State has got what he announced last July.
This debate is about something that was not announced in July. To be honest, I do not believe that Ministers ever intended to get themselves into such a position. I do not believe that any of the Ministers sitting on the Front Bench said in a Whitehall ministerial meeting, "I've had a bright idea. Why don't we charge more for students from England, Wales and Northern Ireland if they go to Scotland than we charge those who live in Scotland?" No Minister came up with such an idea. Whatever I may think of the ministerial team, I do not believe that they would be quite that daft.
I do not believe that a second Minister then chipped in, saying: "I've an even better idea. Why don't we exempt students from fourth-year fees if they come from the rest


of Europe but not if they come from England, Wales or Northern Ireland?" We are debating not a policy, but an accident as a result of the failure of Ministers in the Scottish Office and the Department for Education and Employment to get their act together as they were developing higher education policy.

Dr. George Turner: Will the hon. Gentleman explain why the policy is an accident, given that the exemption for four-year degree courses was part of the Denning recommendations, and that that noble Lord still supports what he recommended?

Mr. Willetts: That noble Lord is dead. The hon. Gentleman may be referring to Lord Dearing. I am, of course, familiar with the arguments in the Dearing report. Following comments on exemption for tuition fees, the very final sentence of the Dearing report on this subject states:
Beyond that, this would be a matter for consideration by the Secretary of State for Scotland.
That was an open invitation to the Secretary of State for Scotland to consider making arrangements so that we would not get into the anomalous position in which Ministers have landed themselves. I should be interested in whether the Minister wished to deny at the Dispatch Box that, as I believe, Scottish Office Ministers have prepared in their budget a contingency plan for the £2 million that will be necessary to deal with the anomaly. That is what Lord Dearing invited them to do.
Let us consider briefly in turn—I shall certainly not speak for the same length of time as the Minister—some of the unbelievably convoluted and complicated arguments that have been put before the House in this debate, and earlier today, by the Prime Minister in Prime Minister's Question Time. First, let us turn to the figures on university applications.
Last week, the Prime Minister told us in Prime Minister's Question Time:
the number of English students applying to Scottish universities is up, not down. It is actually 33,000."—[Official Report, 24 June 1998; Vol. 314, c. 1047]
Unusually, the Prime Minister apologised in today's Question Time for getting that wrong. It was simply incorrect; the figures clearly show that applications to Scottish universities from English students are down by 4.1 per cent.
Then we heard an even more ingenious argument. We were told that, although applications to Scottish universities from English students have fallen, it does not matter, because overall applications to Scottish universities have fallen by even more. I should not have thought that that is something that anyone would want to celebrate. In racing down to the bottom, which is the best that Ministers can come up with, they tell us that such a fall does not matter, because the overall figure has fallen by 5.4 per cent.
The statement by the Universities and Colleges Admission Service of 12 June gives its figures. They indeed show a fall of 4.1 per cent. in applications to Scottish universities from English students, and an overall fall—in students from Scotland, the rest of the United Kingdom and the rest of the European Union—of 4.5 per

cent. Why is that? A fall of 30.3 per cent. in applications to Scottish universities from students in Eire has brought down the average.
The Prime Minister said that such wider changes were irrelevant to the policy; they are not. Applications from Eire have fallen by 30 per cent. because it has just got rid of tuition fees, and more students in the Republic of Ireland are staying at Irish universities. To claim that phenomenon as the explanation or defence of what the Government are trying to do is to pile distortion on distortion.

Miss Melanie Johnson: The hon. Gentleman neglected to mention the figures for Wales, which show a 4.5 per cent. increase in applications. I invite his comments on the point, which was made by the Minister, that the figures are for applications, which fill places many times over. All we are arguing about is the massive over-subscription for places. Spending more money on those limited places for the few people occupying them, rather than on a larger number of students, will only increase the number of unsuccessful applicants and reduce the number of those who are able to attend universities and complete the degree courses.

Mr. Willetts: That was equal to about three interventions. The figure for Wales, which I have here, of an increase of about 40 in applications, is trivial compared with the problem of a fall in applications from England and, as Northern Ireland Members have mentioned, from Northern Ireland.

Mr. Beggs: Does the hon. Gentleman agree that the position with applications from Northern Ireland is even more serious, because of the absence of adequate university provision within Northern Ireland? Many of our able youngsters, who could compete favourably with others at Scottish universities, may lose completely.

Mr. Willetts: The hon. Gentleman is correct, and, although the Minister seemed rather uncertain about this idea, he is talking about a well-established tradition, under which many students from Northern Ireland have gone to Scottish universities, partly because of historic links between the two countries. As the hon. Gentleman pointed out—

Mr. Jim Murphy: Will the hon. Gentleman give way?

Mr. Willetts: I want to make more progress. I shall finish this point.
The tradition is attributable also to the absence of sufficient higher education provision in Northern Ireland.
In the text surrounding its figures, UCAS said:
Institutions in Scotland, where honours degrees are traditionally four years long, continue to be affected by the introduction of tuition fees.
That is a perfectly obvious and comprehensible point, and I do not understand the attempts to create ever more confusion about it.

Mr. Murphy: Will the hon. Gentleman give way?

Mr. Willetts: No, I want to move on to a different point. I shall not speak for as long as the Minister did.
The other argument we hear is about the treatment of European students. Whatever ingenious arguments the Minister tries to put before the House tonight, he does not have a reasonable prospect of sustaining this policy through the European courts in the months and years ahead. The idea that the European Court of Justice will not interfere in a manifestly discriminatory policy comes from cloud cuckoo land. He would be much better off finding the £2 million necessary to concede the point now, rather than being hauled through the courts in future.

Mr. David Jamieson: The figure is £27 million.

Mr. Willetts: I am grateful to the hon. Gentleman for that remark, which is the next point that I should like briefly to consider. When the Minister has run out of all the ingenious and intricate claims he has made tonight, the one argument that remains is that we are on a slippery slope, that this is the thin end of the wedge—we all know the Whitehall arguments—and that the cost would be not £2 million, but £27 million.
The figures from the House of Commons Library—and, indeed, from Ministers themselves in written answers—are absolutely clear. The cost of exempting students from England from fourth-year tuition fees in Scotland would be £1.5 million; for students from Wales the cost would be £45,000, and for students from Northern Ireland it would be £550,000. That is the cost of dealing with the anomaly that we are debating tonight. The anomaly is one in which two students born in different countries of the United Kingdom, going to the same Scottish university, will face different levels of tuition fees simply because of where they were born. What we are talking about is what goes on within a Scottish university. That is the point at issue tonight.

Mr. Wilson: From what the hon. Gentleman says, am I right to conclude that he would not support the extension of the same concession to four-year degree courses in England; and, if so, will he vote for the Lords amendment, which envisages exactly that happening?

Mr. Willetts: The Lords amendments are permissive—[HON. MEMBERS: "Ah."]—they put no obligation on Ministers in either the Department for Education and Employment or the Scottish Office to spend £27 million. All they require is that, at any given university, students who come from different parts of the United Kingdom should be treated on the same basis for tuition fees.
I quite accept that at St. Andrews and at Edinburgh university there is an historic different way of delivering higher education from that at English universities. We are not saying that students at English universities should be exempt from fourth-year tuition fees—we accept that, at £27 million, that would be too expensive. All we are asking is that students from different parts of the United Kingdom going to the same university should be treated on the same basis. That is why dealing with the anomaly would cost only £2 million, not £27 million.

Mr. Willis: There are two amendments for debate tonight, and we would hope to have two separate votes, if that is necessary. The second of the amendments, which refers to page 22, lines 31 to 39, is very specific. It deals specifically with students from England, Wales and

Northern Ireland going to Scottish universities. It is bogus of the Minister to claim otherwise. That debate is at the heart of our deliberations this evening.

Mr. Willetts: The hon. Gentleman is quite correct. What we are talking about is the regime in Scottish universities, which is what the amendment tabled in another place to which he refers is all about.

Mr. Wilson: Will the hon. Gentleman give way?

Mr. Willetts: Yes, although the Minister did not accept my second intervention, so I am treating him better than he treated me.

Mr. Wilson: I had more competition facing me than the hon. Gentleman has. He makes a fundamental point and it seems to me that we could abandon proceedings now. He is simply wrong when he says that the amendments are permissive—they are not. The Lords amendment in lieu of Commons amendment No. 64 states clearly:
Regulations under this section shall ensure that any arrangements for the payment of grant in respect of tuition fees for the fourth or any subsequent year of study at a higher education institution in England or Wales apply equally to a student whose parental home or normal place of residence",
and so on and so forth. It is not permissive. As the hon. Gentleman appears to have renounced the meaning and the spirit of the amendment on which we shall vote later, I wonder what we are debating.

Mr. Willetts: This is very interesting. If the Minister is going to tell the House that he will accept the motion that specifically covers students from England, Wales and Northern Ireland in Scottish universities for a cost of £2 million, the Opposition will happily accept that. That is the anomaly about which my hon. Friends and I are complaining. There is not a complaint in Bristol—

Mr. Wilson: On a point of order, Mr. Deputy Speaker. It is essential for the House to know whether the hon. Member for Havant (Mr. Willetts) is moving the Lords amendment in lieu of Commons amendment No. 64, given that he has renounced its content.

Mr. Deputy Speaker: The motion before the House has been properly moved. That is a debating point, not a point of order.

Mr. Willetts: It is the Minister who is moving the motions to tonight. My point is that we are not imagining, claiming or demanding that students in English universities should be exempted from fourth-year tuition fees; we are saying simply that, when students from different parts of the United Kingdom are studying side by side at Scottish universities, they should all be treated on the same basis. That is the point, that is the anomaly and that is what the argument is about. There have not been protests in England about this matter; it concerns the Scottish universities.

Mr. Jim Murphy: Will the hon. Gentleman give way?

Mr. Willetts: No, I must conclude now.
The motion is about establishing that there should be equal treatment of English, Northern Irish and Welsh students at a university in Scotland. If all that the Minister can do is to offer us evermore ingenious and intricate arguments for something that no reasonable man would defend, that is the beginnings of the decay of a Government when Whitehall arguments triumph over practical common sense.

Mr. Dalyell: On a point of order, Mr. Deputy Speaker. Perhaps it was inadvertent, but the Opposition Front-Bench spokesman seemed to kill off the noble Lord Denning, who I am told is in fact alive and flourishing.

Mr. Deputy Speaker: I am sure that the House will be glad to hear that.

Mr. Donald Gorrie: On a point of order, Mr. Deputy Speaker. The Public Bill Office agrees with my interpretation of the Lords amendment that the House is seeking to overturn, which is different from the Minister's understanding. The hon. Gentleman was trying to say that the Lords amendment—

Mr. Deputy Speaker: Order. That is not a point of order for the Chair. The hon. Gentleman is extending the debate.

Mr. Willetts: On a point of order, Mr. Deputy Speaker. I wish to extend my gratitude for the correction, and my apologies to Lord Denning.

Mr. Deputy Speaker: I am sure that the hon. Gentleman's apology will be noted.

Dr. George Turner: The slip of my tongue was certainly outdone by the slip of the dagger on the Opposition Benches. First, I must briefly remind the House that among Sassenachs, because of Scottish ancestry, I have a warm spot in my heart for a number of Scottish traditions.

Mr. Willis: On a point of order, Mr. Deputy Speaker. I apologise to the hon. Member for North-West Norfolk (Dr. Turner) for interrupting, but this matter is germane to the whole debate. There is a difference of opinion between the Government and both Opposition Front-Bench spokesmen about interpretation. Can you ask for an official interpretation of the amendment?

Mr. Deputy Speaker: It is for Ministers to explain to the House the motion that is before it.

Dr. Turner: When the House last discussed the issue, I at least understood the emotional content of some of the debate. If I did not understand where the arguments appeared to have come from, certainly the politics seemed straightforward. The politics of the Opposition are that they will lay their hands on anything, even if it means abandoning the principles that they have argued elsewhere on the Bill, to find something that can be represented as the Government being unfair.
As the noble Lord Dearing explained last week that equity was the motivation behind his committee proposing the exemption for Scottish students attending Scottish universities, I find it difficult to understand why a party that says that it wants to implement the Dearing proposals will argue against them when it suits their political purposes.
After many years spent as a university teacher and admissions officer, and in being involved with course design work, particularly for courses that allowed students to join in different years and which tried to encourage applications from Europe and further afield, I know that one must face many issues when considering the merits of three and four-year courses.
When I first joined the university system many years ago, the word "elitist" could rightly have been used to describe the attitude of many in higher education who believed that they had some right to a level of funding and support that was but a dream for those in further education, particularly those at our schools. I know from my political experience of the changes that took place in the universities. In the name of efficiency, they were forced to impose unacceptably low unit costs to meet what I believe was the admirable objective of an increase in the numbers of students.
However, as a member of a local education committee, I saw that that had to be balanced against the many funding needs of the local education authority, which were unmet almost every year—in my county of Norfolk, three and four-year-old nursery provision was non-existent, and almost all sixth-form provision received inadequate funding.

Mr. John Hayes: Like the hon. Gentleman, I was a member of a local education authority for many years. He seems to be saying that there was an imbalance between the resources for higher education and those for schools and nurseries, so is he arguing that, for 18 years, the previous Government funded universities too generously?

Dr. Turner: I said that I saw an inequity. There was an elitist attitude in the universities—when I joined the university system, only a tiny minority of people were able to go to universities, which meant that there was less funding to support those who were unable to go to them. The nation faces a challenge in trying to strike the right balance between supporting those who are unable to go to university because they have failed at an earlier stage and the aspirations of those who are already at university.
I spent many years in university circles, and I know that many people in English universities want the four-year course to be the norm. Indeed, it would be good to think that, in the next millennium, the nation could afford a standard honours course that lasted four years, as that would allow for a relaxation in what can be an intense pace of study.
I have to ask myself whether that is the priority that I want to support as a Member of Parliament. I believe that better funding for—not the extension and relaxation of—what we already do should be our highest priority; we cannot afford the luxury of four-year courses as the norm in these isles before we have improved the quality of three-year courses and opened the doors of our


universities and further education institutions to larger numbers of pupils. If hon. Members do not recognise that the argument is about priorities, they are missing the point.

Mr. Dalyell: Will my hon. Friend clarify whether his argument is that the Scottish four-year course should be ended, or have I misunderstood?

Dr. Turner: My hon. Friend misunderstands me. As I said at the outset, to avoid misunderstanding, I have an automatic, even genetic, sympathy with the Scottish system. However, that system is fundamentally different from the English system. One may regard it as superior or inferior, but the truth is that it is fundamentally different. People can create false anomalies only because we are trying to match the needs of two different systems and of those who want to transfer between them.

Mr. Randall: Will the hon. Gentleman give way?

Dr. Turner: I must make some progress, as I know that other hon. Members want to speak.
The fundamental question that Dearing and the Government have had to face is why four-year courses in Scotland are treated differently from the four-year courses that exist in England. If that had been the subject of this debate, I could have understood that those who represent the Scottish interest had an argument. I know enough about Scotland to be aware that significant numbers—it used to be the majority—of pupils move from school to university after one year of post-compulsory school education.
I know that the pattern has shifted and that many now do a further round of highers, but a large number of pupils in Scotland start their four-year degree course after only one year at highers, as opposed to the two years at A-level enjoyed by the vast majority of English pupils as the standard—although by no means the only—route into English universities.
A comparison between the number who flow north of the border and the number who come south shows that the real difficulties arise in transferring into England after one year post-16 in Scotland. Some of the English four-year courses allow that transition, because they are structured for those who want to change subjects.
The Dearing inquiry had to consider whether an exception should be made for Scottish universities' four-year courses because of the significant number of students who would be seen to be treated inequitably if they were required to pay for all four years. Because the inquiry saw that that would be unfair to that majority, or large minority, of students in Scotland, it recommended an exclusion for Scottish students, who would have only the same number of years of post-compulsory schooling as their English counterparts, who had two years at A-level and three for a standard university course.

Mrs. Browning: If what the hon. Gentleman says about the situation in Scotland, England, Wales and Northern Ireland is the case, what is the justification for the exemption for Holland, Germany, Italy, Belgium, France, Portugal, Spain and all the other European Union countries? Are they all being exempted for exactly the

same reason, or have the Government received rather different advice about their actions in relation to those countries?

Dr. Turner: I know that the Conservative party is obsessed with all matters European, and I believe that that was an arid debating point, with which the Minister has already dealt completely adequately. The hon. Lady may tempt me to speak for longer than I had intended. That dreadful nationalistic approach, which does not recognise the difference between this country and Europe, has divided her party and done it no good whatever.
It is important to realise—I hope that Scottish Members are listening carefully—that the Government erred on the side of generosity to Scotland. I was tempted to raise this issue when these measures last came to the House, and I will resist no longer. The Government have taken a principled exemption, designed to allow those students in Scotland who had done only one year of post-compulsory education at school to pay for only three years of fees, and extended it to all students in Scotland, so that those students who take two years and do a further round of highers are also exempt.

Sir Robert Smith: It is important to realise that it is not only a matter of the number of years at school and university, because often the first year of the subject that you study at university will be crucial to your degree and not relevant to what you studied in your two years in the sixth form. Say you studied law, medicine or—

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The hon. Gentleman should know that it is highly unlikely that I will be studying law or any other subject.

Dr. Turner: It would be nice if we could afford to allow everyone to do whatever they wanted and to have unco-ordinated career patterns, switching to any course at any time. Some time in the next millennium, we will no doubt be able to have perpetual students who never make up their mind about what they want to do. My question is whether the Government can afford to give greater priority—

Mr. Willis: Will the hon. Gentleman give way?

Dr. Turner: I need to make some progress with my argument. I want to make sure that the House clearly understands that the Government have erred in favour of Scottish students and Scottish universities. Will the Minister explain why the Government have been so generous to Scottish universities?

Mr. Willis: Will the hon. Gentleman give way?

Dr. Turner: I will, as the hon. Gentleman is so insistent.

Mr. Willis: I am grateful to the hon. Gentleman. I know that he was in full flow, but I am trying to help him. He seems to be saying that, because students in Scotland leave school a year earlier than their English counterparts, they deserve an additional year's exemption.


Can he tell me why a domiciled Scottish student who wants to study medicine or veterinary science will receive no exemption?

Dr. Turner: As I said, the trouble with exemptions is that, once those in authority embark on them, they have to justify not going one step further. The Government need to be pinned down on why they have made the exemption at all. That is the real question that needs to be answered, and I hope to hear a clear answer from the Minister.
The Minister has said—I believe that the figures given by his counterpart in the House of Lords bear this out—that the extra cost is about 5 per cent. of the total that might be involved. Supporting a four-year course will involve many costs to the state. As I said at the outset, I believe that, when fundamentally different systems are operating, an element of judgment must feature in the granting of exemptions to take account of those fundamental differences.
I think it reasonable to exempt Scottish students, because of the fundamentally different system under which they are educated in and after school; but I see no reason why someone from northern England, for example, should be able to cross the border to do a four-year course and benefit from an exemption from which he or she could not benefit at the university at which I studied in England. The Opposition want to create an anomaly: they want an English student taking a four-year course in Scotland to be treated differently from an English student taking a four-year course in England. I see no reason for that, and I think that the Government should stick firmly to the opposite principle.
I have read the report of the debate in the other place. The Opposition there seemed not to be learned and erudite, or to know what they were talking about; their views seemed to be based on the same party political principles as the views that we are hearing tonight. I hope that the amendments will be thrown out.

Mr. Wallace: I hope that I will be forgiven if I do not follow the hon. Member for North-West Norfolk (Dr. Turner) down all the byways of his speech, since I was not entirely sure where he was going.
The Minister's introductory speech astounded me. I had already thought that the Government's arguments were pretty threadbare, but the longer the Minister went on, the more threadbare they became. That has been the character of the Government's position throughout the debate. The hollowness of their arguments has been matched only by their obstinate unwillingness to admit that they are wrong, and that the simplest thing to do would be to accept the Lords amendments, particularly the one dealing specifically with Scottish institutions.
9.45 pm
I mentioned the Government's arguments. No great battery of arguments has been fired against us, however; instead, the Government have had to put up successive arguments, because almost every argument that they have made has been shot down. When the policy was first announced, the Minister thought that he could destroy his critics and win the day by sheer bluster. He described

his critics as indulging in "hyperbolic nonsense". He criticised those who defended extra fees for defending the "rich English". The Minister likes to pride himself on being the scourge of the Nats, but if that remark had come from the Scottish National party, I can just imagine his outcry against such a nationalistic act. There were further echoes of that statement in the Minister's attempted defence of the Government's position tonight.
Having failed with that argument, the Government attempted to use misleading figures. I would be ruled out of order, and would not argue, Mr. Deputy Speaker, if I said that the Minister had used lies or damned lies, but "Erskine May" allows me to say that he used statistics. As the hon. Member for Havant (Mr. Willetts) has pointed out, it was totally misleading to say that the proportion of students applying to Scottish universities from England was down by less than the total drop in applications. The point being made was about the substantial reduction in student applications from the Republic of Ireland, whose students are not coming to Scotland because Irish tuition fees have been abolished. The Minister also ignored important points about students who come to Scotland from Northern Ireland for long-standing traditional reasons. The number coming from Northern Ireland is down about 5.5 per cent. The overall figure is 4.5 per cent. As the hon. Member for Havant said, the Universities and Colleges Admission Service explained that with reference to the introduction of tuition fees.

Mr. Jim Murphy: I have listened with interest to the point made by both the hon. Gentleman and the hon. Member for Havant (Mr. Willetts) about students from Northern Ireland. Applications to Scottish and other United Kingdom universities from Northern Ireland have gone down. The hon. Gentleman claims that that was caused by tuition fees. If that is so, how can he explain the 15 per cent. reduction in the number of Northern Irish students going to colleges and universities in the Republic of Ireland over a two-year period? His figures do not add up. There has been a drop of 4 to 5 per cent. in applications from Northern Ireland to the UK, but a drop of 15 per cent. of applications from Northern Ireland to the Republic, despite its abolition of fees.

Mr. Wallace: I will not explain why students have not gone to the Republic of Ireland, although they would not get loans if they did so. However, almost 380 fewer students have applied from Northern Ireland to Scottish universities, which is a significant drop over last year's figure. The hon. Gentleman cannot just wish that away by making comparisons with applications to the Republic of Ireland.

Mr. Hayes: Of the Northern Irish students who go to Scottish universities, more than three quarters are from state schools. We heard no description from the Minister of the schools in Northern Ireland when he gave his sociological breakdown; he chose to dwell solely on England in his analysis.

Mr. Wallace: I noted that point. The Minister was keen to read out Eton, Wellington and dear knows where else, but he failed significantly to respond to queries on the schools attended by Northern Irish students who went to Scottish universities.
Other arguments have been used. In the other place, Lord Sewel said that the Bill compensated Scottish students who went to university aged 17 after only one year of post-statutory school age education. That is simply factually wrong. It is a long time since I was at school but only two of my fellow pupils left at the end of fifth year. The rest of us went to university at the end of sixth year. When I heard that argument from the Government, I thought that there had been a sea change but in fact only 7.4 per cent. of 17-year-olds in Scotland were in higher education institutions in 1995. The argument does not stack up.
Lord Sewel advanced another argument. He tried to say that the first year at Scottish university was there to make up for the alleged lack of depth achieved with a one-year or two-term higher. Apart from being patronising to the Scottish education system, that ignores the fact that the distinctiveness of the Scottish education system lies in its breadth and quality. That point has been used to justify another weak prop of the Government's argument.
The Government say that students from England, Wales and Northern Ireland can skip the first year of Scottish degree courses and go straight into the second year, thereby avoiding a year's worth of fees. That does not meet the test of critical examination. Less than 12 per cent. of students from England, Wales and Northern Ireland go straight into the second year of courses in Scottish universities. It was previously only 6 per cent. for England and 7 per cent. each for Wales and Northern Ireland. The numbers were decreasing. The Government's argument ignores the fact that many subjects, such as law, engineering and psychology cannot be done at school, so the first year is necessary. That argument does not stack up either. Second-year entrants miss out on the opportunity to study the extra subjects that they could have studied in the first year.

Shona McIsaac: Does the hon. and learned Gentleman accept that applications from England for entry in the second year of Scottish university courses have doubled, which totally destroys his argument?

Mr. Wallace: That makes rather than destroys my argument, because the trend was down. It is under the pressure of the Government's policy that the figure has tumbled. Unfortunately, the hon. Lady cannot see it.
The fear is that linked to these measures is the systematic undermining of the Scottish four-year degree course. The Minister, who is no longer with us, has said that he wants the advanced higher to be on a par with A-levels. In a letter to me this week he said that he looks forward to similar advanced entry for Scottish pupils who had taken the advanced higher. He wrote:
Where institutions make offers of credit or advanced standing for holders of A levels, Advanced Higher students should be given similar recognition.

Mr. Swayne: Will the hon. and learned Gentleman give way?

Mr. Wallace: I want to make progress. There is widespread concern that what underlies the proposal is the systematic undermining of the traditional, broad-based, four-year Scottish honours course.
The Government's most ludicrous argument is that they are acting in this way because it helps to emphasise the distinctiveness of the Scottish education system.

Mr. Welsh: I am amazed at what the hon. and learned Gentleman says. He makes an important point by illustrating what a mess the Government's policy is in. They cannot even implement "higher still", never mind the advanced higher. They have got their education policy, both at schools and universities, into a complete mess.

Mr. Wallace: The hon. Gentleman knows that we agree. "Higher still" implementation has been appalling. When the advanced higher was first mooted, the understanding was that it would proceed on a broad base, but now we are talking of people taking only two or three advanced highers, making the examinations similar to A-levels—just when people in English education have been looking at the breadth of the Scottish education system.
For the Minister to argue that what the Government are doing emphasises the distinctiveness of the Scottish system, and that we will have such so-called anomalies with devolution, misses the point. The distinctiveness will not be based on the system but on domicile, and a limited domicile at that because the arrangements apply only to people living in England, Wales or Northern Ireland. The proposals are nothing to do with the system. The problem is made worse by the fact that students from Umbria are exempted whereas students from Cumbria are not. The Under-Secretary of State for Education and Employment, the hon. Member for Pontypridd (Dr. Howells), may groan, but he will have cause to groan even more. [Interruption.]

Mr. Deputy Speaker: Order. There is too much noise in the House.

Mr. Wallace: As my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis) said, there could be a legal challenge to the Government. My noble Friend Earl Russell was told in another place that the Government were confident that they were right. This evening, the Minister told us that he had taken legal advice. Of course, we know that the Government take legal advice. The Labour party in Scotland took legal advice when it tried to remove the lord provost of Glasgow, and look what happened then. So we know the quality of advice—

Mr. Jim Murphy: rose—

Mr. Wallace: I am not going to take any advice from the hon. Gentleman. It is probably no better than the last lot he gave me and probably no better than the advice that the Government were given on this matter.
Some distinguished professors of educational law have raised a serious point. Under the European convention on human rights, there may well be challenges to the Government's position on this matter.
My final point relates to cost. The point has been made tonight that the amendments would cost some £27 million. The first amendment makes no such commitment. All that it says is that there cannot be discrimination between


Scottish and Northern Irish students who attend English and Welsh institutions. The second amendment relates only to making a level playing field for English, Welsh and Northern Irish residents who come to Scottish universities. The Minister has accepted that the cost of that is only £2 million. That is £2 million that will not kick in until 2001—the fourth year of courses starting this year under the present system. I do not believe that the Government could not find £2 million in the next three years.

Dr. George Turner: Will the hon. Gentleman give way?

Mr. Wallace: No, the hon. Gentleman had a fair say.
In his report, Garrick referred to comparable qualifications elsewhere in the United Kingdom.

Mr. John McAllion: I did not realise, until the hon. and learned Gentleman said it a few moments ago, that the requirement to find £2 million would not apply until 2001—the fourth year of honours courses starting this year. By that time, there will be a Scottish Parliament, which will be responsible for the funding of higher education. It could be that the Scottish Parliament will overturn the decision of the House tonight when it really matters.

Mr. Wallace: That is obviously the case. Perhaps people will be sufficiently enlightened to find the £2 million.

Mr. Jim Murphy: I thank the hon. and learned Gentleman for giving way. If I have the opportunity to speak, I will give way to him. On the issue of the Scottish Parliament, the hon. and learned Member for North-East Fife (Mr. Campbell), writing in the alumni association magazine of St. Andrews university, said:
There will never be unlimited resources for Higher Education. The Scottish Parliament won't change this. It is also unlikely that the proportion of expenditure on Higher Education within the total education budget will increase.
Those are the words of his hon. and learned Friend, in whose constituency the university is. Does the hon. and learned Gentleman disagree with his hon. and learned Friend on that point?

Mr. Wallace: It is self-evident that the Scottish Parliament will not suddenly be able to make unlimited funds available for higher education. No one has pretended otherwise. However, the hon. Member for Dundee, East (Mr. McAllion) pointed out that the Scottish Parliament might well be able to find £2 million to ensure that English, Welsh and Northern Irish students can still come to Scottish universities and study on an equal basis for an honours degree. That is something that the hon. Gentleman and his party are not willing to do because they have such a mean-minded attitude. They realised early on that they had it wrong, and they do not have the guts or the courage to admit it. Perhaps in the remaining minutes and hours of this debate, they can see the light. There is joy in heaven over sinners that repent.

Mr. Canavan: I wish to make it clear at the outset that I am against all tuition fees. There was no mention of

them in the Labour party manifesto, and during the general election campaign, the Prime Minister specifically said that Labour had no plans to introduce tuition fees. Whatever justification the Government may try to come up with for tuition fees in general, there surely can be no justification for the anomaly whereby one student at a Scottish university has to pay £3,000 in tuition fees, whereas another student in the same class doing the same course at the same university with the same parental financial circumstances has to pay £1,000 more. Ministers try to justify the unjustifiable when they say that there is some justice and equity in that. The net result will be a disincentive for many students from England, Wales and Northern Ireland to go to Scottish universities.
When the matter was previously debated, we were repeatedly told that there was no evidence for that. There is evidence—UCAS produced statistics, unfortunately just a few days after the previous debate on the subject. They clearly show that applications to Scottish universities are down by 4.5 per cent., that applications from England to Scottish universities are down by 4.1 per cent. and that those from Northern Ireland are down by 5.5 per cent.

It being Ten o'clock, the debate stood adjourned.

Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
That, at this day's sitting, the Teaching and Higher Education Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Jamieson.]

Question agreed to.

Lords amendment again considered.

Mr. Canavan: For some universities, the situation is even bleaker. In the past week, my capable researcher telephoned some universities and has produced some interesting statistics. For example, applications to Aberdeen university from England are down by 6 per cent. Applications from England and Wales to Dundee university are down by 13 per cent. and those from Northern Ireland are down by 22 per cent. Applications to Glasgow Caledonian from England are down by 13 per cent. Applications to Robert Gordon university from England are down by 39.4 per cent. Those from Wales are down by 47.6 per cent. and those from Northern Ireland are down by 5.45 per cent. At Strathclyde university, applications from England are down by 14 per cent.
If that trend continues, there is a genuine and justifiable fear for the viability of some of the four-year honours courses and the Scottish tradition of a broad-based education.

Mr. Swayne: Can the hon. Gentleman not see that there is an agenda here? The statement that A-level students and advanced students from England can enter at the second year contains the inevitable implication that the first year is remedial. That is the death knell for the distinctive Scottish four-year degree system.

Mr. Canavan: I would never describe the first year of a four-year honours degree course as remedial, but Scottish universities fear that if the trends in the statistics that I have quoted continue, there could be a long-term threat to the viability of the four-year honours course.

Mr. Jim Murphy: I should like to query two of my hon. Friend's points. I do not in any way wish to cast


aspersions on the ability of his researcher. However, the Minister gave figures that are not in dispute when he spoke about a drop of 4 to 5 per cent. in applications from England to Scottish institutions. My hon. Friend has spoken about drops of 12 to 25 per cent. In which institutions have applications gone up, and do my hon. Friend's figures add up? His aggregate seems to be 12 to 25 per cent., but the actual figure is 5 per cent.

Mr. Canavan: My hon. Friend can get his own research team to prepare his speeches. I have quoted the work of my researcher, whom I trust very much.
The fear for the future of the four-year honours course at Scottish universities was exacerbated by the Minister in the previous debate on the issue. He said:
For some people, three-year degrees are right, and they are wasting their time doing six years at school and four years at university. I do not accept the idea that to maintain some bogus tradition, it is inherently better to spend 10 years at that stage of one's life in education than eight or nine years."—[Official Report, 8 June 1998; Vol. 313, c. 794.]
I appreciate that the Minister of State re-explained his remarks tonight, and that may be helpful. However, his use of the phrase "bogus tradition" in the previous debate caused deep offence in many Scottish universities.
I heard Ministers and hon. Members saying that students from England can go straight into the second year. That may be possible in some cases, for some individuals and for some courses, but it is not universally applicable. I have also heard Ministers say that Scots students go to university a year earlier than their English counterparts.
I heard the Prime Minister insinuating that this afternoon. He, of course, has some experience of Scottish education. He was educated at Fettes college, which is not exactly a typical Scottish comprehensive school; it is more like an English public school. He was nevertheless correct to draw a distinction between Scottish highers and English A-levels. Because Scottish pupils normally sit their highers in the fifth year, some have university entrance qualifications after five years' secondary education. Therefore, it is true that many Scottish students have university entrance qualifications at an earlier age than their English counterparts, but that does not necessarily mean that they go to university a year earlier.
I think of my experience, for example, both as a pupil and as a teacher. I left school at the age of 15 with university entrance qualifications. I was not particularly bright; it was just that I was kicked out of primary school a year early because the teachers were probably fed up with me asking too many awkward questions. I left school at 15, but I did not immediately go to university and, in retrospect, I am glad that I did not.
Later, when I was a teacher, many pupils—not just a few—aged 16 and 17 had university entrance qualifications after five years of study at secondary school, but, in general, my advice to them was to stay on at school for a further year and to do the certificate of sixth-year studies before going to university, because that sixth year would give them the chance to mature, to develop a habit of independent study and to do all the other things that help young people to make a success at university and in later life. However, my fear now is that the financial implications of the abolition of maintenance grants and the imposition of tuition fees will mean that

some potential students may not go to university at all, and that others may, because of financial circumstances, go too early for their own good.
I come to the cost of the amendment. During the debate in the other place, the Minister seemed to pluck out of thin air this figure of £27 million. I do not think that it was mentioned in this House during the previous debate. Obviously, the civil servants have been working hard to try to justify the Government's stance in the other place, and that figure of £27 million was repeated by the Prime Minister last week—it is the amount required to meet the fees for all United Kingdom students on the fourth year of degree courses, at all universities throughout the UK.
That is not, with respect, comparing like with like. In England, a four-year degree course is exceptional, but in Scotland the four-year honours degree is the norm, rather than the exception. Besides, the Government's proposal will not cause a situation in any college or university in England, Wales or Northern Ireland whereby students from some parts of the UK have to pay more than students from another part, so the Scottish anomaly is unique. I understand that there is some difference of opinion about the technicality of the amendments and so on, but there would be a broad welcome if the Government were to give a signal that they would consider the uniqueness of the Scottish anomaly and think again.
About 3,500 non-Scottish UK students are in the final year of four-year honours courses at Scottish universities. If they were all paying full fees, the cost to the Treasury of getting rid of the anomaly would be £3.5 million. However, if we assume that, as the Government keep telling us, 30 or 40 per cent. of students are exempt from fees, and that another 30 per cent. pay only partial fees, the total cost would be about £2 million—as I said in the previous debate. I am pleased that the Government have since confirmed that figure as a fair estimate.
The cost would of course be split between three Departments—the Department for Education and Employment, the Welsh Office and the Northern Ireland Office. I fail to understand why my hon. Friend the Minister of State has drawn the short straw, by being lumbered with the responsibility of trying to explain the Government's policy. It would have been more appropriate for Ministers from the Department for Education and Employment, the Welsh Office and the Northern Ireland Office to try to justify the policy. My hon. Friend—to give him his due—said fairly early, even before the Bill was published, that he would ensure that the Scottish Office paid the final-year fees for students domiciled in Scotland. I do not know why his counterparts in the other Departments cannot do the same for students from south of the border, Wales and Northern Ireland.

Miss Melanie Johnson: This is a very interesting argument, and I should be interested to hear my hon. Friend's comments on this. If he is arguing that English students should have their fourth year at a Scottish university paid for—I understand that argument very well—what does he say about Scottish students attending English universities? Does he believe that they, too, should have their fourth year paid for—even if they are doing a three-year course? Whichever way one looks at the matter, in either direction, is there not an anomaly?

Mr. Canavan: I thought that I had already dealt with that point. I said that the four-year honours course in


Scotland is the norm rather than the exception, whereas four-year honours courses in England are not the norm. A Scottish student who attends university in England—whether it is for four years or whatever—will pay exactly the same fees as his or her counterpart from England, Wales or Northern Ireland, whereas a student from England attending a Scottish university will have to pay more than his or her Scottish counterpart. That inequity creates the—

Miss Johnson: Will my hon. Friend give way?

Mr. Canavan: No. I have dealt with the point twice already, and I shall not go on repeating myself.
The Minister seemed to argue that the main beneficiaries of the Lords amendment will be students from well-off backgrounds. He came out with some alleged facts about students from places such as Eton, Harrow, Winchester and Wellington at Edinburgh university. I wondered about that. I certainly do not recall that, while I was at Edinburgh university in the 1960s, there were huge numbers of public school boys or public school girls in my class. I got the impression that there were more working-class students with wellington boots than upper-class wallies from Wellington school. I should have thought that, in this day and age, Edinburgh university and St. Andrews university would be even more egalitarian.

Mr. Jim Murphy: Will my hon. Friend give way?

Mr. Canavan: No, I have already given way to my hon. Friend.
Even if it is true that well-off students will benefit most from a Government concession, that is equally true of the original concession—on students domiciled in Scotland—which was announced so generously by my hon. Friend the Minister.

Mr. Murphy: It is not true.

Mr. Canavan: We are asking only for equity. It is true.

Mr. Murphy: It is not true.

Mr. Canavan: It is true. If the hon. Gentleman cannot see that, he should go back to school—[Interruption.]

Mr. Deputy Speaker: Order. The hon. Member for Eastwood (Mr. Murphy) must be quiet. He does not stand a very good chance of being called to speak in the debate if he continues with sedentary interventions.

Mr. Canavan: It is a nonsense to claim that only rich students, or students from rich families, will be paying fees. Most students will have to pay fees in whole or in part. Anyone with a residual income of £16,000 per annum or more will have to pay some fees—and £16,000 per annum is not exactly filthy rich. I fail to understand the argument that it is only students from rich backgrounds who will benefit from the Lords amendment.
I cannot understand why the Government are behaving in such an intransigent and apparently arrogant way. It is not good enough for Ministers to say that the House of Lords is in favour of the amendment and the Tory party is in favour of the amendment, so we ought to be against it. That is knee-jerk reaction politics at its worst.
10.15 pm
Let us look at the merits of the amendment, rather than the source of the amendment. [Interruption.] I am glad that my hon. Friend the Minister agrees with me. I can remember that not all that long ago, my hon. Friend was on the same side as the Tory party and the House of Lords when he helped to destroy the last Labour Government's proposals to set up a Scottish Parliament. Anyway, I do not want to go into that at this time of night—and I want to abolish the House of Lords completely and have no second Chamber at all, whether through heredity or patronage. In fact, I believe that the abuse of patronage might be even worse than heredity, but I do not want to go into that.

Mr. Deputy Speaker: Order. It does not matter whether the hon. Gentleman wants to go into that, because we have a different motion before us.

Mr. Canavan: In conclusion, it is rather ironic that on this issue even the reactionary House of Lords takes a more enlightened view than the Government. I am sure that if we were given a free vote in this House, this House would be like minded. I therefore appeal to hon. Members to consider the merits of the case.
If the House accepted the Lords amendment, we would be doing the Government a great favour, by saving them from the embarrassment of an almost certain defeat in the European Court of Justice. I have been informed that a Member of the European Parliament has already complained to the European Commission and has demanded that the Commission look into this discriminatory matter of tuition fees to see whether any European directives have been contravened. Even if the existing European directives have not been contravened in the opinion of the Commission, it would of course be open to any individual to take a test case to the European Court of Justice.
I appeal to my hon. Friend the Minister: surely it should not require court action to convince the Government to think again. The previous Government suffered the humiliation of one court defeat after another, and we do not want to have to go through that, either in the courts in this country or in the courts of the European Union.

Mrs. Margaret Ewing: I shared many teaching experiences with the hon. Gentleman. Does he agree that the Government might find themselves having to pay legal bills amounting to more than the £2 million that he mentioned earlier?

Mr. Canavan: I am grateful to my hon.—I almost said "my hon. Friend". I mean my former honourable teaching colleague, but she is my honourable friend in the sense of the teaching profession because she and I taught in the same very good school. I am grateful to her for her intervention. The £2 million is surely a very modest sum in the context of total Government expenditure.
If a student from France, Germany or Italy pays the same as a Scottish student because France, Germany and Italy are in the European Union, surely students from England, Wales and Northern Ireland are entitled to the same treatment because they are also in the European Union. It is a simple matter of equity and justice. I urge the Government, even at the 11th hour, to do the honourable thing and ensure a fairer deal for all students who choose to study at Scottish universities.

Mr. Boswell: Perhaps for the first time in my political experience, I very much endorse the remarks of the hon. Member for Falkirk, West (Mr. Canavan). I speak as a former Minister responsible for higher education, with a residual and somewhat obsolescent knowledge of the regulations. I concentrate on those rather than the wider issues of justice, as I believe that the Government are skating on very thin legal ice. I have no precise legal expertise in these matters, but I am convinced by my experience that they should reconsider their decision.
Like their predecessors since the 1980s, the Government are constrained by the Gravier judgment, which prohibits discrimination against students from the European Union or the European economic area in respect of tuition fees. In other words, if most UK domestic students are currently exempted from tuition fees by mandatory awards, the same facility must be available to European students.
I am interested in the argument that I believe the Government are deploying—that the judgment applies only in a single-market sense, in that it prevents artificial distinctions between citizens of different member states, but is silent on whether a Government may discriminate between citizens of their own state, as is happening tonight.
I am slightly surprised that the Government have not fallen back on the argument that universities are private institutions that are not formally or strictly absolutely obliged to charge fees, although of course the system is set up so that they must do so. Perhaps it is arguable that universities discriminating in their fees policies might themselves risk legal challenge. Beyond that, it is extremely unlikely that any court would not look beneath the surface at the reality behind the legislation. It is legal thin ice indeed.
Even if Gravier applies only at the macro level, between citizens of member states, it is arguable whether the Government can sustain discrimination between citizens of different parts of the United Kingdom. It is one thing to charge fees on the basis of the institution and to require that all those studying there should be subject to the same regime, just as those who live in a particular place are liable to the taxes that apply there. In this case however, the question whether fees are charged will be determined by an entirely contingent factor—where the student happens to live. There is no basis within a single state—the United Kingdom—for discrimination along those lines. I suspect that such discrimination would be under direct attack through the European convention on human rights and probably also through the European Court of Justice, in respect of any British citizen who happened to live south of the border.
The Minister of State conspicuously failed to answer the point that I put to him in an intervention, in respect of the position of a student who is a national of another

EU country, but happens to have a parental home or a normal place of residence in England, Wales or Northern Ireland. The Minister said that it was a normal administrative matter and that it would be a matter of determining whether that student would be exempt from Scottish fees or treated as an English student for that purpose. Either way, the Government would be in severe difficulty. If they decided that a German student resident in Carlisle or Bolton should be treated as a Scottish student as he was attending a Scottish university, and exempted him from fourth-year fees, it would then be arguable that an English student attending a Scottish university should also benefit from that decision. If they decided that such a person were an honorary Englishman although he was a German national, how would they reconcile that decision with the Gravier judgment? I do not think that they could do it. They have either to act in a hybrid manner in English law, by treating two residents of England in different ways, or they have to break the principles of the European Union.

Mr. Ian Bruce: Will my hon. Friend give way?

Mr. Boswell: I fear that I shall not, as I want to conclude in two minutes' time.
The Minister said that he was relatively unconcerned about this minor matter, which he sought to minimise. I do not believe that he would claim to have come into politics to allow discrimination or unfairness on the grounds that it was peripheral or minor. One case of discrimination or unfairness would be not only a legal affront, but politically unacceptable.
I am also concerned that if the anomaly persists, it will drive a wedge between the English and Scottish university systems, to their mutual detriment. Before that happens, if the Government persist in their petty little proposals and if the House is not prepared to reject them, the Government will go down in the courts and even the petty little saving that they seek will not be available. The whole matter will be swept up in legal fees and recriminations, which they could easily have avoided.

Mr. Jim Murphy: I am pleased to participate in the debate. I believe that I am the most recent scholar of a Scottish university in the House, although I am happy to be corrected if another hon. Member has different information.

Ms Sandra Osborne: Me.

Mr. Murphy: My hon. Friend suggests that she might beat my record, but until half-past 2 in the morning of 2 May last year, I was a student at Strathclyde university. Only my election to this place interrupted that study.

Ms Osborne: I stand corrected.

Mr. Murphy: I understand that I have only a few moments, but I shall allow the hon. and learned Member for Orkney and Shetland (Mr. Wallace) to intervene if he wants, as I said earlier.
Claims have been made by hon. Members on both sides that supporting the Lords amendment would in some way challenge elitism. I do not believe that the votes of hereditary peers in the House of Lords represent a move


towards the end of elitism. I fail to understand why such a significant number of hereditary Tory peers got so excited over a small number of students. I guess that if we were dealing with 2,000 or 3,000 students who were not from better-off backgrounds in the greater public schools of England, the hereditary peers in the House of Lords would not be so overly exercised. I am not comfortable with that.
My hon. Friend the Member for Falkirk, West (Mr. Canavan) suggested that there was no difference between the social make-up of Scottish students at Scottish universities and those from England. That is not correct. Some 48 per cent. of students from Scotland studying in Scottish universities are from skilled backgrounds, whereas 73 per cent. of English students studying at Scottish universities are. I am not proud of the additional fact that only 1 per cent. of English students studying at Scottish universities come from unskilled working-class backgrounds. I have nothing against that 1 per cent. The figure should be higher, but we need to reform our education system lower down to achieve that. I do not believe that the Government, with their emphasis on providing opportunities for many more people, should provide a subsidy to the 1 per cent. who want to study at Scottish universities.

Mr. Hayes: rose—

Mr. Murphy: I apologise to the hon. Gentleman, but time is not an ally.
There are income thresholds throughout the system. If English students wants to study in a Scottish university, good luck to them. I wish them well. I shared that experience with many colleagues and friends at Strathclyde university. We are saying simply that there should be an income test and an examination of an individual's ability to pay
Between 5,000 and 6,000 English students studied at Scottish universities in 1996. When one discounts the 10 per cent. who will not study an honours degree, the one third who will not have to pay any fees whatever and the many other facts and figures, one is left with about 2,000 students paying £1,000 over four years. That works out to be less than 69p for each day's study at a Scottish university. If the individual comes from a family earning £35,000 a year or more, I think that they can afford the price of a can of Irn Bru and a Daily Record.

Mr. Donald Gorrie: I would like the Minister to clarify one or two points. Does he agree that the Lords amendments in no way suggest removing fourth-year fees from all universities in England? If so, his argument about the £28 million is totally irrelevant. Will he clarify whether the Lords amendments propose a level playing field in Scotland, so that the English, Welsh and Irish will not pay more than the Scots, and propose a level playing field in England, so that the Scots will not benefit and will pay fourth-year fees like anyone else?
Will the Minister clarify whether the fees will at all help the universities financially? As I understand it, grants to universities fall commensurately as the fees go up. So, there will be no increase in the universities' revenues,

merely assistance to the Treasury. Will the Minister favour us with his knowledge of which Scottish university principals are in favour of the Labour proposal, as he implied? [Interruption.]

Mr. Deputy Speaker: Order. I appeal to the House once again to come to order. It is bad manners to conduct private conversations while an hon. Member is addressing the House. The hon. Member for Bromsgrove (Miss Kirkbride) is having a conversation just now. She should not be doing that.

Mr. Gorrie: The Minister pleads in support of his argument the whole cause of devolution. Devolution and diversity represent the right and the excellence of different systems in different parts of the United Kingdom; a Scottish course may be different from an English, Welsh or Irish course. The Minister is not proposing such diversity. He is proposing that students from different parts of the United Kingdom, who are in the same lecture hall, taking the same course, be treated differently. That is not diversity; that is gross unfairness.
The Minister tried to defend his line on bogus tradition by the fact that there had been a recent increase in the number of students taking honours as opposed to ordinary degrees. Does he agree that there is a long Scottish tradition—of 250 or 300 years—of a breadth of education which has been developed in different ways in different courses?
The first year of the four-year degree is an absolutely critical part of that strong tradition. People who went straight into the second year would miss that. In addition, most Scottish courses do not allow people to enter in the second year. There is much evidence from universities that students who do so go back to the first year because they cannot make it, or give up altogether. Often, going straight into the second year is not clever.
The Minister delivered his litany about how we would not help students in Elgin or West Lothian if we pursued the amendment—but we would. It is in the interests of students from Elgin, West Lothian and other parts of the Scotland that there are viable first-year courses in Scottish universities. His measures will undermine that. We would be supporting future opportunities in Scottish universities.
The Minister is busy promoting a cause of "higher still", which will mean that more Scottish students stay on to the sixth form. My hon. and learned Friend the Member for Orkney and Shetland (Mr. Wallace) made it clear that the argument that all Scots go from the fifth year into university is complete rubbish. The Minister's arguments are totally flawed, and he should give way gracefully.

Mr. Welsh: I congratulate the hon. Member for Falkirk, West (Mr. Canavan) on his speech in which we heard the true, honest voice of what used to be the Labour party. He read out the early statistical effects of the policy—a very damning educational ragman's roll—which was created and implemented by the Government and will have cumulative effects on Scottish education.
Tonight the House again has an opportunity to resolve the anomaly whereby Scottish and European Union students at Scottish universities will have their fourth-year tuition fees paid, but non-Scottish resident UK students will not. The Scottish National party has from the start


highlighted that flaw, among others, in the Government's higher education policy. After asking a series of parliamentary questions, I secured an Adjournment debate on the subject in January. Since then, hon. Members from all parties and a majority in another place have joined me in my opposition to the Government's policy.
The Government's proposal is nothing short of discrimination against English, Welsh and Northern Irish students for no other reason than nationality. In The Scotsman newspaper today, it was again suggested that this policy contravenes the European convention on human rights and that the Government could be challenged under European law.
In a written answer, the Under-Secretary of State for Education and Employment, the hon. Member for Pontypridd (Dr. Howells), said:
The EC Treaty requires Member States not to discriminate on grounds of nationality against nationals of other Member States, on matters within the scope of the Treaty. However, EC law does not intervene in internal matters and requires each Member State to treat all its own nationals in exactly the same way."—[Official Report, 1 December 1997; Vol. 302, c. 10.]
In other words, because European law does not prevent the Government from discriminating against their own citizens on the ground of nationality, the Government can do as they please. Following that logic, the Government could justify apartheid to themselves, if to no one else.
The policy is not only unfair to students from other parts of the United Kingdom; it will have adverse effects on Scottish institutions, Scottish education and the wider Scottish economy. English, Welsh and Northern Irish students will be deterred from coming to Scotland. Already, applications from the rest of the UK are down by 4.5 per cent. Some Scottish universities, such as Dundee and Abertay, have seen a substantial drop in applications, particularly from Northern Ireland. The final result of the Government's policy will not be known until the autumn when the more important admissions figures will be released.
Any drop in numbers of students from other parts of the United Kingdom will force Scottish institutions to downsize their diverse range of courses. There is also the danger that Scottish universities will be forced to consider abandoning the four-year honours degree and replacing it with a three-year course, so as to compete on a level playing field to attract non-Scottish resident UK students. Universities are being forced to redesign courses to suit second-year entrants for financial, not educational or academic, reasons.
The broad-based four-year degree is gaining admiration and popularity in other countries. Yet the Minister for Education and Industry has disgracefully described it as a bogus tradition. University is not and should never be a case of simply rushing people through and giving them a certificate at the end. It is a learning process and should be treated as such.
The policy will have economic repercussions, causing a reduction in the £210 million spent in Scotland each year by students from other parts of the UK.
Through written questions, I have secured pledges from the Scottish Office, the Department for Education and Employment and the Northern Ireland Office that they will monitor the effects of tuition fees and this anomaly on student numbers. I ask the Minister for an assurance that if there is any substantial drop in the number of

English, Welsh or Northern Irish entrants to Scottish institutions this autumn, fourth-year fees for such students will be at least immediately reviewed and at best waived. I seek guarantees that the Government will monitor their policy and take action if it proves to be deleterious, as many of us fear it will be.
The Government must listen, not only to the views expressed tonight by hon. Members on both sides, but to the voice of students, lecturers and principals. The Government's policy is opposed by the Association of University Teachers, the National Union of Students, the Scottish Ancients, the Committee of Scottish Higher Education Principals and the Committee of Vice-Chancellors and Principals of the Universities of the United Kingdom. The Government are on their own. The new Labour Government think that they know better, but if they are so confident of the wisdom of their policy and the strength of their argument, why will they not trust their own Members of Parliament to support them and allow a free vote tonight? We can be sure that they will not do that.
The Scottish Minister is left without credibility on this issue. He says that he is widening choice, but he is, in fact, restricting student choice. He says that he wants to follow the Dearing report, in his own words, "to the letter", but he is not so doing. Tonight, he praises the four-year honours degree, having previously called it a "bogus tradition". Faced with a 4.5 per cent. drop in non-Scottish UK students, he is reduced to semantics about percentages. All we have heard from the Minister is debating tricks and vitriol, which cannot disguise the weakness of his DFEE colleagues who have let him down in respect of their policy. The tuition fees policy is simply discriminatory. It is unnecessary and it could easily be remedied if there were any willingness in other Government Departments to do something about it.
The Labour Government have got it wrong. For a limited cost, the English, Welsh and Northern Irish education departments could sort out the anomaly, restore fairness and end this blatant discrimination against English, Welsh and Northern Irish students at Scottish universities. The Government should do that and, for their failure to act, they will rightly be judged.

Mr. Dalyell: May we hark back to the persistent, pertinent, but unanswered questions put by the hon. Member for East Antrim (Mr. Beggs)? It is part of the business of the House of Commons to think policies through, and I want, first, to ask a direct question of my hon. Friend the Minister. What happens in court when a student from Belfast—they are a litigious lot there—decides to take court action in relation to that student from Dublin who is paying £1,000 less? That is not a possibility whipped out of the air; as certain as certain can be, there will be legal action. When I interrupted his opening speech, my hon. Friend the Minister said, "I would not be at the Dispatch Box unless all those things had been taken care of," but I fear that I have experience of too many Ministers of different parties going to the Dispatch Box and saying, "Yes, we are legally watertight—all is well," and, some time later—usually sooner rather than later—coming back, with the proverbial egg on their face. I repeat the question: what is the legal advice?
The hon. Member for Daventry (Mr. Boswell), a former Minister with responsibility for higher education, knows very well that there is massive Government lawyer legal


advice available to any Minister. Are we to take it that that advice has not been forthcoming? Either it has not been forthcoming, or the House of Commons deserves to be told tonight what that advice is. Many of us, from different angles, think that we are going to get into great difficulty with the European, and possibly the UK, courts. Will the Minister say something about that?
Secondly, on the question of elitism, 30 per cent. of the students at Heriot-Watt come from England. That is not elitism—it is a very real problem for the Scottish universities. Thirdly, among many letters that I have received is one from a Labour party member in Kirkby Lonsdale, Mrs. Rodd, who says:
What infuriates many people is the obvious injustice of someone from Bordeaux or Brussels paying the Scottish rate, but those from Berwick or beyond to the south on this island, being alienated by this discriminatory fee practice. This is to say nothing of the effect on the universities themselves and the stoking up of the separatist movement that this sort of action is fuelling.
That is the view of a prominent Labour party member from the north of England. How are we supposed to answer that?
The hon. Member for Angus (Mr. Welsh) alluded to a number of organisations, including the Association of University Teachers. The last paragraph of a letter that it sent to all Scottish Members of Parliament states:
Scotland will be the poorer if English, Welsh and Northern Irish students are discouraged from attending our traditionally culturally diverse universities. It cannot be right that a student from Carlisle should be treated significantly worse than a student from Cologne when studying in Scotland and we ask that Scottish MPs reconsider this issue and vote against the Government amendment, which we hope, even at this late stage, may be withdrawn.
That is the considered view of the AUT.
10.45 pm
Finally, as I see the Whip looking at his watch, I should like to say that I was taught by the late Aneurin Bevan, as were many of my generation, that one should always take the strongest argument against one. In this case, it is the figure of £27 million. I put that case to Stewart Sutherland, vice-chancellor of the university of Edinburgh, for a considered opinion, which was this:
The main counter-argument to parity of treatment for all UK students studying in Scotland is that the cost would be far greater than the estimated £2 million. It is argued that the thin end of the Scottish wedge would lead to an increase in the number of students on four-year courses in England. This surely is a matter on which the Secretary of State's advice and—

Mr. Deputy Speaker: Order. I have told the hon. Gentleman on previous occasions that I do not want him to read letters from outside organisations in full. He knows how to paraphrase a letter better than I do, so I hope that he will not get into the practice of reading them into the record.

Mr. Dalyell: I would disagree with you on only one thing, Mr. Deputy Speaker, and that is that I could do that better than you. I am sure that you would do it better.
The gist of the letter is that the vice-chancellor of the university of Edinburgh, who has some say in the matter, is convinced, along with his colleagues—I think that he is speaking for the vice-chancellors—that we should reflect carefully before going ahead.

Mr. Damian Green: At the end of this debate, there is only one real question left: what was the

exact mixture of incompetence, malice and pig-headedness that put the Government in their current hole? Just look at the coalition that is assembled against them. It is not merely my right hon. and hon. Friends, but the Liberal Democrats, the nationalists, the Cross-Bench peers and men and women of principle on the Labour Benches.
Outside this House, the Committee of Vice-Chancellors and Principals, the Scottish universities and the National Union of Students are all lined up against the Government. Outside the Government ranks, no one thinks that their policy is fair and right.
The reason for such an all-embracing coalition opposing the Government is richly illustrated by the appalling mess that the Prime Minister and other Ministers have got themselves into when trying to argue that the measure is not making Scottish universities less attractive. First, the Minister says that applications are down; secondly, the Prime Minister says that they are up; thirdly, the Prime Minister says that, when he said up, he meant down, but not down as much as other applications. Truly, that is Orwellian; it is "Nineteen Eighty-Four", new Labour newspeak—up means down and black means white.
Behind that—whether one believes what the Minister said last week, what the Prime Minister said last week, or what the Prime Minister said this week—there is even greater confusion. When I asked the Department for Education and Employment for its projected application figures, the Under-Secretary of State, the hon. Member for Pontypridd (Dr. Howells), said that the Department did not publish them. When asked a straight question, the Government answers "Yes," "No," and "We do not know." Any student applying to a Scottish university will have to do better than that.
It is important to nail some myths that the Government have propagated this evening. The first is that their policy is having no effect on applications. The Universities and Colleges Admission Service has said that applications from England to Scottish universities are 4.1 per cent. down on last year. The trend has been steadily rising, but it is now going down because of the Government's policy.
Let me nail another myth—that English students can easily, after A-levels, pick up a Scottish course in the second year. There are various problems with that, not least the fact that they do not and cannot. Last year, 8 per cent. of English students at Scottish universities started their courses in the second year. The Association of University Teachers has said that, even at that manageable level, anecdotal evidence from its members and from students shows that many students find the transition too difficult and either drop down into the first year or have to retake the second year. The idea that English students are sufficiently capable to swan in in the second year without needing the four-year course is completely at variance with the facts.
Even if it were true that English students could easily begin the course in the second year, that assumes that English students will all have done A-levels. From a Government who are supposed to be encouraging vocational qualifications and different types of learning, that assumption is particularly perverse. What about students from other European countries, many of which also have completely different education systems? Why are those students entitled to privileges that students from England, Wales and Northern Ireland do not have?
The Minister was reduced to complete absurdity when he tried to defend the policy on the "World At One". He was asked why a youngster from France would pay £3,000 when a youngster from England would pay £4,000. "Ah," said the Minister, "it's because France is in the European Union"—to which the interviewer responded: "Isn't England?" That sums up the Government's confusion as well as anything.
Among the opposition that is clear, concise and principled is that from the National Union of Students. I pay tribute to the current leadership, because it consists of that increasingly rare breed—independent-minded Labour politicians. I dare say that many of them are ambitious to sit in the House with their Labour colleagues. Indeed, the principled Labour Members who will vote against the Government tonight should include former presidents of the NUS, of whom there are five on the Labour Benches. I ask them which way they will vote. Will the hon. Member for Eastwood (Mr. Murphy), for example, defend the interests of students or the interests of his career?
I contrast how I suspect many of the ex-presidents of the NUS will vote with the principled stance taken by the hon. Member for Falkirk, West (Mr. Canavan). I do not want to embarrass him by complimenting him too much; I merely observe that, in return for his principles, it has been decided that he is unfit to be a Labour candidate for the Scottish Parliament. The Labour party is right in that—men and women of principle are not what it requires on its benches in the Scottish Parliament.
The Minister said that he is acting on the best legal advice. He should consider the European convention on human rights; the Human Rights Bill has not yet been enacted but, when it is, it will have a serious effect on the Government's policy.
In The Scotsman today, Dr. Dennis Farrington, a law lecturer at Stirling university and the author of "The Law of Higher Education", said that a student would be able to challenge the Government's policy through the British courts. If the lawyers are telling the Minister that everything is okay, my friendly advice to him is to go and find some new lawyers. One can always find lawyers to give a new opinion, and the advice from Government lawyers is probably wrong.
The Minister made palpable his dislike of many of the most distinguished Scottish universities. He had gone to the trouble of researching where the students came from so that he could sneer at them. It is a matter for him whether he dislikes English public schools so much that he wants to denigrate them and the students they send to Scottish universities, but if he sneers at English public schools he may end up sneering at Scottish public schools such as Fettes, which might prove disadvantageous to his career.
It is ill advised to sneer at well-off students from England but to assume that well-off students from all other countries are okay. The Minister had a go at alliteration. Why is his policy okay in Motherwell or Munich, but not in Manchester? The hon. Member for North-West Norfolk (Dr. Turner) presented an extraordinary argument on Europe. He was right to say that the Scottish system is fundamentally different. That is why the Government's argument that the change would cost them £27 million, rather than the £2 million for the purely Scottish exemption, is completely spurious. The Government picked that figure of £27 million out of the air and cannot justify it in any way.
The heart of our argument is not statistical: it concerns fairness. Students from North Berwick and from Berwick-upon-Tweed should be treated on the same basis in the same universities, be they in England, Scotland, Wales or Northern Ireland. Both the changes that the Lords want to make would achieve that equality—the first for students at English and Welsh universities and the second for those at Scottish universities—and would not commit the Government to that spurious £27 million.
The Government have made no case at all. Hon. Members can vote against the Government, safe in the knowledge that they are on the side of both justice and rational argument. If they have a spark of decency and a sense of fairness—whether they are old Labour, new Labour, Liberal Democrat, nationalist or Conservative—hon. Members will vote against the Government's mean-spirited little proposals.

Mr. Deputy Speaker: I call Mr. Brian Wilson.

Mr. Wilson: rose—

Mr. Swayne: On a point of order, Mr. Deputy Speaker. The House has already endured more than 45 minutes from the Minister. We would have expected the Secretary of State to explain this farrago. My point of order—

Mr. Deputy Speaker: Order. I called the Minister, and the hon. Gentleman is challenging my judgment.

Mr. Wilson: The more perceptive among my colleagues may have heard generous tributes paid by Opposition spokesmen to men and women of principle on the Government Benches who will join the great coalition of Tories and nationalists in support of the House of Lords. [Interruption.] A briefing sent out by the hon. Member for Havant (Mr. Willetts) to Tory Back Benchers says—[Interruption.]

Mr. Deputy Speaker: Order. It is not a good thing for the Chair to have to intervene, but hon. Members must be quiet when an hon. Member is addressing the House.

Mr. Wilson: Thank you, Mr. Deputy Speaker.
My hon. Friend the Member for Falkirk, West (Mr. Canavan) was held up as a paragon of principle by the hon. Member for Ashford (Mr. Green). The Tory briefing says:
Our immediate tactics tonight are to encourage as many Labour MPs as possible to rebel against the Government. This is good politics.
Government Members are talking not about playing political games but about the proper funding of higher education, reversing the damage done by 18 years of Tory rule, and widening access to higher education. We will not be diverted by little ploys by Conservative Members.
My hon. Friend the Member for Linlithgow (Mr. Dalyell) asked about the legal advice. I always think that, when people's arguments are in trouble, they send for the lawyers, so let me give the legal advice precisely. It is not contrary to EC law for Scottish legislation to treat students from England, Wales and Northern Ireland


differently from Scottish students. That is a purely internal situation concerning United Kingdom nationals, and EC law is not concerned with such matters.

Mrs. Browning: rose—

Mr. Deputy Speaker: Order. The Minister is not giving way.

Mr. Wilson: I am defending the distinctiveness of the Scottish education system. I am also defending the principle of subsidiarity.
My hon. Friend the Member for Falkirk, West said that people with a residual income of £16,000 would pay fees, and that that was not filthy rich. I ask my hon. Friend, and other hon. Members who try to give the impression that people who cannot afford to pay fees will be asked to pay them, why they are misleading people. In the case referred to by my hon. Friend, the fees would be £50. Does my hon. Friend, or any other Member, believe that £50 over a period of four years will be the decisive factor for someone who, having taken every other factor into consideration, opts for a four-year degree course in Scotland rather than a three-year degree course elsewhere? I do not think that my hon. Friend was suggesting that, but he should not convey misleading messages about what is proposed. Indeed, no one should do so.
I know many pupils whom my hon. Friend taught. Some of them are my best friends, some went on to be very good footballers, and one is now rector of Edinburgh university. I think that my hon. Friend and I should unite on this point. In his inaugural address, the rector of Edinburgh university—my hon. Friend's former pupil, John Colquhoun—pointed to the school that, although it is within a stone's throw of the university, has never sent a single pupil to the university. Let us redress that inequality, and let us worry about access to universities.

Mr. Canavan: During our last debate on the Bill, we addressed that injustice through my amendment, which aimed to maintain grants for students from low-income families, but the Minister—and every other Minister—voted against it.

Mr. Wilson: Let me finish on that point. [HON. MEMBERS: "Answer."] I will answer. [Interruption.]

Mr. Deputy Speaker: Order. Mr. MacKay, I expect better from the Front Bench.

Mr. Wilson: Let me answer directly.
The problem for the Opposition is that every statistic works against them, rather than for them. Since the introduction of student loans as a better way—in the last Government's view—of financing student maintenance, the number of students coming from England to Scotland has not decreased; it has greatly increased.
We must all review our past positions. We must all accept that numbers have risen, and that giving more money to higher education is the way to reverse the damage of 18 Tory years.

Question put:—

The House divided: Ayes 327, Noes 183.

Division No. 323]
[11.3 pm


AYES


Adams, Mrs Irene (Paisley N)
Cunningham, Rt Hon Dr John (Copeland)


Ainger, Nick



Alexander, Douglas
Cunningham, Jim (Cov'try S)


Allen, Graham
Dalyell, Tam


Anderson, Donald (Swansea E)
Darling, Rt Hon Alistair


Anderson, Janet (Rossendale)
Darvill, Keith


Armstrong, Ms Hilary
Davey, Valerie (Bristol W)


Ashton, Joe
Davidson, Ian


Atkins, Charlotte
Davies, Rt Hon Denzil (Llanelli)


Austin, John
Davies, Geraint (Croydon C)


Banks, Tony
Davies, Rt Hon Ron (Caerphilly)


Battle, John
Dawson, Hilton


Bayley, Hugh
Dean, Mrs Janet


Beard, Nigel
Denham, John


Beckett, Rt Hon Mrs Margaret
Dewar, Rt Hon Donald


Bell, Stuart (Middlesbrough)
Dismore, Andrew


Bennett, Andrew F
Dobbin, Jim


Bermingham, Gerald
Dobson, Rt Hon Frank


Berry, Roger
Donohoe, Brian H


Betts, Clive
Doran, Frank


Blackman, Liz
Drew, David


Blears, Ms Hazel
Eagle, Angela (Wallasey)


Blizzard, Bob
Eagle, Maria (L'pool Garston)


Blunkett, Rt Hon David
Edwards, Huw


Boateng, Paul
Efford, Clive


Borrow, David
Ellman, Mrs Louise


Bradley, Keith (Withington)
Ennis, Jeff


Bradley, Peter (The Wrekin)
Etherington, Bill


Bradshaw, Ben
Field, Rt Hon Frank


Brinton, Mrs Helen
Fisher, Mark


Brown, Rt Hon Gordon (Dunfermline E)
Fitzsimons, Lorna



Flint, Caroline


Brown, Rt Hon Nick (Newcastle E)
 Flynn, Paul


Brown, Russell (Dumfries)
Follett, Barbara


Browne, Desmond
Foster, Rt Hon Derek


Buck, Ms Karen
Foster, Michael Jabez (Hastings)


Burden, Richard
Foster, Michael J (Worcester)


Burgon, Colin
Galbraith, Sam


Butler, Mrs Christine
Galloway, George


Byers, Stephen
Gapes, Mike


Campbell, Alan (Tynemouth)
Gardiner, Barry


Campbell, Mrs Anne (C'bridge)
George, Bruce (Walsall S)


Cann, Jamie
Gibson, Dr Ian


Caplin, Ivor
Gilroy, Mrs Linda


Casale, Roger
Godsiff, Roger


Cawsey, Ian
Goggins, Paul


Chapman, Ben (Wirral S)
Golding, Mrs Llin


Chaytor, David
Gordon, Mrs Eileen


Chisholm, Malcolm
Griffiths, Jane (Reading E)


Church, Ms Judith
Griffiths, Nigel (Edinburgh S)


Clark, Rt Hon Dr David (S Shields)
Griffiths, Win (Bridgend)


Clark, Dr Lynda (Edinburgh Pentlands)
Grocott, Bruce



Grogan, John


Clark, Paul (Gillingham)
Gunnell, John


Clarke, Charles (Norwich S)
Hain, Peter


Clarke, Tony (Northampton S)
Hall, Mike (Weaver Vale)


Clelland, David
Hall, Patrick (Bedford)


Clwyd, Ann
Hamilton, Fabian (Leeds NE)


Coaker, Vernon
Hanson, David


Coffey, Ms Ann
Harman, Rt Hon Ms Harriet


Cohen, Harry
Heal, Mrs Sylvia


Coleman, Iain
Healey, John


Colman, Tony
Henderson, Doug (Newcastle N)


Connarty, Michael
Hepburn, Stephen


Cook, Rt Hon Robin (Livingston)
Heppell, John


Corston, Ms Jean
Hewitt, Ms Patricia


Cousins, Jim
Hill, Keith


Cranston, Ross
Hinchliffe, David


Crausby, David
Hodge, Ms Margaret


Cummings, John
Home Robertson, John


Cunliffe, Lawrence
Hoon, Geoffrey






Hope, Phil
Morley, Elliot


Howarth, Alan (Newport E)
Morris, Ms Estelle (B'ham Yardley)


Howarth, George (Knowsley N)
Morris, Rt Hon John (Aberavon)


Howells, Dr Kim
Mowlam, Rt Hon Marjorie


Hoyle, Lindsay
Mudie, George


Hughes, Ms Beverley (Stretford)
Mullin, Chris


Hughes, Kevin (Doncaster N)
Murphy, Denis (Wansbeck)


Humble, Mrs Joan
Murphy, Jim (Eastwood)


Hurst, Alan
Naysmith, Dr Doug


Hutton, John
Norris, Dan


Iddon, Dr Brian
O'Brien, Bill (Normanton)


Illsley, Eric
O'Brien, Mike (N Warks)


Jackson, Ms Glenda (Hampstead)
O'Hara, Eddie


Jackson, Helen (Hillsborough)
Olner, Bill


Jamieson, David
O'Neill, Martin


Jenkins, Brian
Organ, Mrs Diana


Johnson, Miss Melanie (Welwyn Hatfield)
Osborne, Ms Sandra



Palmer, Dr Nick


Jones, Mrs Fiona (Newark)
Pearson, Ian


Jones, Helen (Warrington N)
Pendry, Tom


Jones, Jon Owen (Cardiff C)
Perham, Ms Linda


Jones, Martyn (Clwyd S)
Pickthall, Colin


Jowell, Ms Tessa
Pike, Peter L


Kaufman, Rt Hon Gerald
Plaskitt, James


Keeble, Ms Sally
Pollard, Kerry


Keen, Alan (Feltham  Heston)
Pond, Chris


Keen, Ann (Brentford  Isleworth)
Pope, Greg


Kennedy, Jane (Wavertree)
Pound, Stephen


Khabra, Piara S
Prentice, Ms Bridget (Lewisham E)


Kidney, David
Prentice, Gordon (Pendle)


Kilfoyle, Peter
Primarolo, Dawn


King, Andy (Rugby  Kenilworth)
Prosser, Gwyn


King, Ms Oona (Bethnal Green)
Purchase, Ken


Kumar, Dr Ashok
Quin, Ms Joyce


Ladyman, Dr Stephen
Quinn, Lawrie


Lawrence, Ms Jackie
Radice, Giles


Laxton, Bob
Rammell, Bill


Lepper, David
Rapson, Syd


Leslie, Christopher
Reed, Andrew (Loughborough)


Lewis, Ivan (Bury S)
Reid, Dr John (Hamilton N)


Liddell, Mrs Helen
Robertson, Rt Hon George (Hamilton S)


Linton, Martin



Lloyd, Tony (Manchester C)
Roche, Mrs Barbara


Lock, David
Rooker, Jeff


Love, Andrew
Rooney, Terry


McAvoy, Thomas
Ross, Ernie (Dundee W)


McCabe, Steve
Rowlands, Ted


McCafferty, Ms Chris
Roy, Frank


McCartney, Ian (Makerfield)
Ruddock, Ms Joan


McDonagh, Siobhain
Russell, Ms Christine (Chester)


Macdonald, Calum
Ryan, Ms Joan


McFall, John
Salter, Martin


McGuire, Mrs Anne
Savidge, Malcolm


McIsaac, Shona
Sawford, Phil


McKenna, Mrs Rosemary
Sedgemore, Brian


Mackinlay, Andrew
Shaw, Jonathan


McLeish, Henry
Sheerman, Barry


McNulty, Tony
Sheldon, Rt Hon Robert


MacShane, Denis
Short, Rt Hon Clare


Mactaggart, Fiona
Singh, Marsha


Mallaber, Judy
Smith, Rt Hon Andrew (Oxford E)


Mandelson, Peter
Smith, Angela (Basildon)


Marsden, Gordon (Blackpool S)
Smith, Rt Hon Chris (Islington S)


Marsden, Paul (Shrewsbury)
Smith, Miss Geraldine (Morecambe  Lunesdale)


Marshall, David (Shettleston)



Martlew, Eric
Soley, Clive


Meacher, Rt Hon Michael
Southworth, Ms Helen


Meale, Alan
Spellar, John


Merron, Gillian
Squire, Ms Rachel


Michael, Alun
Starkey, Dr Phyllis


Milburn, Alan
Stevenson, George


Miller, Andrew
Stewart, David (Inverness E)


Moffatt, Laura
Stewart, Ian (Eccles)


Moran, Ms Margaret
Stinchcombe, Paul


Morgan, Ms Julie (Cardiff N)
Stoate, Dr Howard


Morgan, Rhodri (Cardiff W)
Stott, Roger





Strang, Rt Hon Dr Gavin
Walley, Ms Joan


Straw, Rt Hon Jack
Ward, Ms Claire


Stringer, Graham
Watts, David


Stuart, Ms Gisela
White, Brian


Sutcliffe, Gerry
Whitehead, Dr Alan


Taylor, Rt Hon Mrs Ann (Dewsbury)
Wicks, Malcolm



Williams, Rt Hon Alan (Swansea W)


Taylor, Ms Dari (Stockton S)



Thomas, Gareth (Clwyd W)
Williams, Alan W (E Carmarthen)


Thomas, Gareth R (Harrow W)
Wills, Michael


Timms, Stephen
Wilson, Brian


Tipping, Paddy
Winnick, David


Todd, Mark
Winterton, Ms Rosie (Doncaster C)


Touhig, Don
Wood, Mike


Trickett, Jon
Woolas, Phil


Truswell, Paul
Worthington, Tony


Turner, Dennis (Wolverh'ton SE)
Wright, Anthony D (Gt Yarmouth)


Turner, Dr Desmond (Kemptown)
Wright, Dr Tony (Cannock)


Turner, Dr George (NW Norfolk)
Wyatt, Derek


Twigg, Derek (Halton)



Vaz, Keith
Tellers for the Ayes:


Vis, Dr Rudi
Mr. Jim Dowd and



Mr. Robert Ainsworth.


NOES


Ainsworth, Peter (E Surrey)
Fabricant, Michael


Allan, Richard
Fearn, Ronnie


Amess, David
Flight, Howard


Ancram, Rt Hon Michael
Forth, Rt Hon Eric


Arbuthnot, James
Foster, Don (Bath)


Ashdown, Rt Hon Paddy
Fowler, Rt Hon Sir Norman


Atkinson, David (Bour'mth E)
Fox, Dr Liam


Atkinson, Peter (Hexham)
Fraser, Christopher


Ballard, Jackie
Garnier, Edward


Beggs, Roy
George, Andrew (St Ives)


Bell, Martin (Tatton)
Gibb, Nick


Bercow, John
Gill, Christopher


Beresford, Sir Paul
Gillen, Mrs Cheryl


Body, Sir Richard
Gorman, Mrs Teresa


Boswell, Tim
Gorrie, Donald


Bottomley, Peter (Worthing W)
Gray, James


Brady, Graham
Green, Damian


Brake, Tom
Greenway, John


Brand, Dr Peter
Grieve, Dominic


Brazier, Julian
Hamilton, Rt Hon Sir Archie


Brooke, Rt Hon Peter
Hammond, Philip


Browning, Mrs Angela
Hancock, Mike


Bruce, Ian (S Dorset)
Harris, Dr Evan


Bruce, Malcolm (Gordon)
Harvey, Nick


Burnett, John
Hawkins, Nick


Burns, Simon
Hayes, John


Burstow, Paul
Heald, Oliver


Butterfill, John
Heath, David (Somerton  Frome)


Campbell, Menzies (NE Fife)
Heathcoat-Amory, Rt Hon David


Chapman, Sir Sydney (Chipping Barnet)
Hogg, Rt Hon Douglas



Horam, John


Chidgey, David
Howarth, Gerald (Aldershot)


Clappison, James
Hughes, Simon (Southwark N)


Clark, Rt Hon Alan (Kensington)
Hunter, Andrew


Clarke, Rt Hon Kenneth (Rushcliffe)
Jack, Rt Hon Michael



Jackson, Robert (Wantage)


Clifton-Brown, Geoffrey
Jenkin, Bernard


Collins, Tim
Johnson Smith, Rt Hon Sir Geoffrey


Cormack, Sir Patrick



Cotter, Brian
Jones, Nigel (Cheltenham)


Cran, James
Keetch, Paul


Curry, Rt Hon David
Kennedy, Charles (Ross Skye)


Davey, Edward (Kingston)
Key, Robert


Davis, Rt Hon David (Haltemprice)
Kirkbride, Miss Julie


Donaldson, Jeffrey
Kirkwood, Archy


Dorrell, Rt Hon Stephen
Laing, Mrs Eleanor


Duncan, Alan
Lait, Mrs Jacqui


Duncan Smith, Iain
Lansley, Andrew


Evans, Nigel
Leigh, Edward


Ewing, Mrs Margaret
Letwin, Oliver


Faber, David
Lewis, Dr Julian (New Forest E)






Lidington, David
Shepherd, Richard


Livsey, Richard
Simpson, Keith (Mid-Norfolk)


Lloyd, Rt Hon Sir Peter (Fareham)
Smith, Sir Robert (W Ab'd'ns)


Loughton, Tim
Soames, Nicholas


Luff, Peter
Spelman, Mrs Caroline


MacGregor, Rt Hon John
Spicer, Sir Michael


MacKay, Andrew
Stanley, Rt Hon Sir John


Maclean, Rt Hon David
Steen, Anthony


Maclennan, Rt Hon Robert
Streeter, Gary


McLoughlin, Patrick
Stunell, Andrew


Madel, Sir David
Swayne, Desmond


Malins, Humfrey
Syms, Robert


Maples, John
Tapsell, Sir Peter


Maude, Rt Hon Francis
Taylor, Ian (Esher  Walton)


Mawhinney, Rt Hon Sir Brian
Taylor, John M (Solihull)


May, Mrs Theresa
Taylor, Matthew (Truro)


Michie, Mrs Ray (Argyll  Bute)
Taylor, Sir Teddy


Moore, Michael
Tonge, Dr Jenny


Morgan, Alasdair (Galloway)
Townend, John


Moss, Malcolm
Trend, Michael


Nicholls, Patrick
Tyler, Paul


Norman, Archie
Tyrie, Andrew


Oaten, Mark
Wallace, James


Öpik, Lembit
Walter, Robert


Ottaway, Richard
Wardle, Charles


Page, Richard
Webb, Steve


Paice, James
Wells, Bowen


Paterson, Owen
Welsh, Andrew


Pickles, Eric
Whittingdale, John


Prior, David
Widdecombe, Rt Hon Miss Ann


Randall, John
Wigley, Rt Hon Dafydd


Redwood, Rt Hon John
Wilkinson, John


Rendel, David
Willetts, David


Robathan, Andrew
Willis, Phil


Robertson, Laurence (Tewk'b'ry)
Wilshire, David


Roe, Mrs Marion (Broxbourne)
Winterton, Mrs Ann (Congleton)


Ross, William (E Lond'y)
Winterton, Nicholas (Macclesfield)


Rowe, Andrew (Faversham)
Woodward, Shaun


Ruffley, David
Yeo, Tim


Russell, Bob (Colchester)
Young, Rt Hon Sir George


St Aubyn, Nick



Salmond, Alex
Tellers for the Noes:


Sanders, Adrian
Mr. Stephen Day and


Shephard, Rt Hon Mrs Gillian
Mr. Nigel Waterson.

Question accordingly agreed to.

Resolved,
That this House insists on its amendment in page 14, to leave out lines 31 to 49, to which the Lords have disagreed and disagrees to the amendment proposed by the Lords in lieu of that amendment.

Motion made, and Question put,
That this House insists on its amendment in page 22, to leave out lines 31 to 39, to which the Lords have disagreed.—[Mr. Wilson.]

The House divided: Ayes 325, Noes 185.

Division No. 324]
[11.16 pm


AYES


Adams, Mrs Irene (Paisley N)
Bell, Stuart (Middlesbrough)


Ainger, Nick
Bennett, Andrew F


Alexander, Douglas
Bermingham, Gerald


Allen, Graham
Berry, Roger


Anderson, Donald (Swansea E)
Betts, Clive


Anderson, Janet (Rossendale)
Blackman, Liz


Armstrong, Ms Hilary
Blears, Ms Hazel


Ashton, Joe
Blizzard, Bob


Atkins, Charlotte
Blunkett, Rt Hon David


Austin, John
Boateng, Paul


Banks, Tony
Borrow, David


Battle, John
Bradley, Keith (Withington)


Bayley, Hugh
Bradley, Peter (The Wrekin)


Beard, Nigel
Bradshaw, Ben


Beckett, Rt Hon Mrs Margaret
Brinton, Mrs Helen





Brown, Rt Hon Gordon (Dunfermline E)
Foster, Michael Jabez (Hastings)



Foster, Michael J (Worcester)


Brown, Rt Hon Nick (Newcastle E)
Galbraith, Sam


Brown, Russell (Dumfries)
Galloway, George


Browne, Desmond
Gapes, Mike


Buck, Ms Karen
Gardiner, Barry


Burden, Richard
George, Bruce (Walsall S)


Burgon, Colin
Gibson, Dr Ian


Butler, Mrs Christine
Gilroy, Mrs Linda


Byers, Stephen
Godsiff, Roger


Campbell, Alan (Tynemouth)
Goggins, Paul


Campbell, Mrs Anne (C'bridge)
Golding, Mrs Llin


Cann, Jamie
Gordon, Mrs Eileen


Caplin, Ivor
Griffiths, Jane (Reading E)


Casale, Roger
Griffiths, Nigel (Edinburgh S)


Cawsey, Ian
Griffiths, Win (Bridgend)


Chapman, Ben (Wirral S)
Grocott, Bruce


Chaytor, David
Grogan, John


Chisholm, Malcolm
Gunnell, John


Church, Ms Judith
Hain, Peter


Clark, Rt Hon Dr David (S Shields)
Hall, Mike (Weaver Vale)


Clark, Dr Lynda (Edinburgh Pentlands)
Hall, Patrick (Bedford)



Hamilton, Fabian (Leeds NE)


Clark, Paul (Gillingham)
Hanson, David


Clarke, Charles (Norwich S)
Harman, Rt Hon Ms Harriet


Clarke, Tony (Northampton S)
Heal, Mrs Sylvia


Clelland, David
Healey, John


Clwyd, Ann
Henderson, Doug (Newcastle N)


Coaker, Vernon
Hepburn, Stephen


Coffey, Ms Ann
Heppell, John


Cohen, Harry
Hewitt, Ms Patricia


Coleman, Iain
Hill, Keith


Colman, Tony
Hinchliffe, David


Connarty, Michael
Hodge, Ms Margaret


Cook, Rt Hon Robin (Livingston)
Home Robertson, John


Corston, Ms Jean
Hoon, Geoffrey


Cousins, Jim
Hope, Phil


Cranston, Ross
Howarth, Alan (Newport E)


Crausby, David
Howarth, George (Knowsley N)


Cummings, John
Howells, Dr Kim


Cunliffe, Lawrence
Hoyle, Lindsay


Cunningham, Rt Hon Dr John (Copeland)
Hughes, Ms Beverley (Stretford)



Hughes, Kevin (Doncaster N)


Cunningham, Jim (Cov'try S)
Humble, Mrs Joan


Dalyell, Tam
Hurst, Alan


Darling, Rt Hon Alistair
Hutton, John


Darvill, Keith
Iddon, Dr Brian


Davey, Valerie (Bristol W)
Illsley, Eric


Davidson, Ian
Jackson, Ms Glenda (Hampstead)


Davies, Rt Hon Denzil (Llanelli)
Jackson, Helen (Hillsborough)


Davies, Geraint (Croydon C)
Jamieson, David


Davies, Rt Hon Ron (Caerphilly)
Jenkins, Brian


Dawson, Hilton
Johnson, Miss Melanie (Welwyn Hatfield)


Dean, Mrs Janet



Denham, John
Jones, Mrs Fiona (Newark)


Dewar, Rt Hon Donald
Jones, Helen (Warrington N)


Dismore, Andrew
Jones, Jon Owen (Cardiff C)


Dobbin, Jim
Jones, Martyn (Clwyd S)


Dobson, Rt Hon Frank
Jowell, Ms Tessa


Donohoe, Brian H
Kaufman, Rt Hon Gerald


Doran, Frank
Keeble, Ms Sally


Drew, David
Keen, Alan (Feltham  Heston)


Eagle, Angela (Wallasey)
Keen, Ann (Brentford  Isleworth)


Eagle, Maria (L'pool Garston)
Kennedy, Jane (Wavertree)


Edwards, Huw
Khabra, Piara S


Efford, Clive
Kidney, David


Ellman, Mrs Louise
Kilfoyle, Peter


Ennis, Jeff
King, Andy (Rugby  Kenilworth)


Etherington, Bill
King, Ms Oona (Bethnal Green)


Field, Rt Hon Frank
Kumar, Dr Ashok


Fisher, Mark
Ladyman, Dr Stephen


Fitzsimons, Lorna
Lawrence, Ms Jackie


Flint, Caroline
Laxton, Bob


Flynn, Paul
Lepper, David


Follett, Barbara
Leslie, Christopher


Foster, Rt Hon Derek
Lewis, Ivan (Bury S)






Liddell, Mrs Helen
Radice, Giles


Linton, Martin
Rammell, Bill


Lloyd, Tony (Manchester C)
Rapson, Syd


Lock, David
Reed, Andrew (Loughborough)


Love, Andrew
Reid, Dr John (Hamilton N)


McAvoy, Thomas
Robertson, Rt Hon George (Hamilton S)


McCabe, Steve



McCafferty, Ms Chris
Roche, Mrs Barbara


McCartney, Ian (Makerfield)
Rooker, Jeff


McDonagh, Siobhain
Rooney, Terry


Macdonald, Calum
Ross, Ernie (Dundee W)


McFall, John
Rowlands, Ted


McGuire, Mrs Anne
Roy, Frank


McIsaac, Shona
Ruddock, Ms Joan


McKenna, Mrs Rosemary
Russell, Ms Christine (Chester)


Mackinlay, Andrew
Ryan, Ms Joan


McLeish, Henry
Savidge, Malcolm


McNulty, Tony
Sawford, Phil


MacShane, Denis
Sedgemore, Brian


Mactaggart, Fiona
Shaw, Jonathan


Mallaber, Judy
Sheerman, Barry


Mandelson, Peter
Sheldon, Rt Hon Robert


Marsden, Gordon (Blackpool S)
Short, Rt Hon Clare


Marsden, Paul (Shrewsbury)
Singh, Marsha


Marshall, David (Shettleston)
Smith, Rt Hon Andrew (Oxford E)


Martlew, Eric
Smith, Angela (Basildon)


Meacher, Rt Hon Michael
Smith, Rt Hon Chris (Islington S)


Meale, Alan
Smith, Miss Geraldine (Morecambe  Lunesdale)


Merron, Gillian



Michael, Alan
Soley, Clive


Milburn, Alan
Southworth, Ms Helen


Miller, Andrew
Spellar, John


Moffatt, Laura
Squire, Ms Rachel


Moran, Ms Margaret
Starkey, Dr Phyllis


Morgan, Ms Julie (Cardiff N)
Stevenson, George


Morgan, Rhodri (Cardiff W)
Stewart, David (Inverness E)


Morley, Elliot
Stewart, Ian (Eccles)


Morris, Ms Estelle (B'ham Yardley)
Stinchcombe, Paul


Morris, Rt Hon John (Aberavon)
Stoate, Dr Howard


Mowlam, Rt Hon Marjorie
Strang, Rt Hon Dr Gavin


Mudie, George
Straw, Rt Hon Jack


Mullin, Chris
Stringer, Graham


Murphy, Denis (Wansbeck)
Stuart, Ms Gisela


Murphy, Jim (Eastwood)
Sutcliffe, Gerry


Naysmith, Dr Doug
Taylor, Rt Hon Mrs Ann (Dewsbury)


Norris, Dan



O'Brien, Bill (Normanton)
Taylor, Ms Dari (Stockton S)


O'Brien, Mike (N Warks)
Thomas, Gareth (Clwyd W)


O'Hara, Eddie
Thomas, Gareth R (Harrow W)


Olner, Bill
Timms, Stephen


O'Neill, Martin
Tipping, Paddy


Organ, Mrs Diana
Todd, Mark


Osborne, Ms Sandra
Touhig, Don


Palmer, Dr Nick
Trickett, Jon


Pearson, Ian
Truswell, Paul


Pendry, Tom
Turner, Dennis (Wolverh'ton SE)


Perham, Ms Linda
Turner, Dr Desmond (Kemptown)


Pickthall, Colin
Turner, Dr George (NW Norfolk)


Pike, Peter L
Twigg, Derek (Halton)


Plaskitt, James
Vaz, Keith


Pollard, Kerry
Vis, Dr Rudi


Pond, Chris
Walley, Ms Joan


Pope, Greg
Ward, Ms Claire


Pound, Stephen
Watts, David


Prentice, Ms Bridget (Lewisham E)
White, Brian


Prentice, Gordon (Pendle)
Whitehead, Dr Alan


Primarolo, Dawn
Wicks, Malcolm


Prosser, Gwyn
Williams, Rt Hon Alan (Swansea W)


Purchase, Ken



Quin, Ms Joyce
Williams, Alan W (E Carmarthen)


Quinn, Lawrie
Wills, Michael



Wilson, Brian



Winnick, David



Winterton, Ms Rosie (Doncaster C)



Wood, Mike



Woolas, Phil





Worthington, Tony
Tellers for the Ayes:


Wright, Anthony D (Gt Yarmouth)
Mr. Robert Ainsworth and


Wright, Dr Tony (Cannock)
Mr. Jim Dowd.


Wyatt, Derek



NOES


Ainsworth, Peter (E Surrey)
Greenway, John


Allan, Richard
Grieve, Dominic


Amess, David
Hamilton, Rt Hon Sir Archie


Ancram, Rt Hon Michael
Hammond, Philip


Arbuthnot, James
Hancock, Mike


Ashdown, Rt Hon Paddy
Harris, Dr Evan


Atkinson, David (Bour'mth E)
Harvey, Nick


Atkinson, Peter (Hexham)
Hawkins, Nick


Ballard, Jackie
Hayes, John


Beggs, Roy
Heald, Oliver


Bell, Martin (Tatton)
Heath, David (Somerton  Frome)


Bercow, John
Heathcoat-Amory, Rt Hon David


Beresford, Sir Paul
Hogg, Rt Hon Douglas


Body, Sir Richard
Horam, John


Boswell, Tim
Howarth, Gerald (Aldershot)


Bottomley, Peter (Worthing W)
Hughes, Simon (Southwark N)


Brady, Graham
Hunter, Andrew


Brake, Tom
Jack, Rt Hon Michael


Brand, Dr Peter
Jackson, Robert (Wantage)


Brazier, Julian
Jenkin, Bernard


Brooke, Rt Hon Peter
Johnson Smith, Rt Hon Sir Geoffrey


Browning, Mrs Angela



Bruce, Ian (S Dorset)
Jones, Nigel (Cheltenham)


Bruce, Malcolm (Gordon)
Keetch, Paul


Burnett, John
Kennedy, Charles (Ross Skye)


Burns, Simon
Key, Robert


Burstow, Paul
Kirkbride, Miss Julie


Butterfill, John
Kirkwood, Archy


Campbell, Menzies (NE Fife)
Laing, Mrs Eleanor


Canavan, Dennis
Lait, Mrs Jacqui


Chapman, Sir Sydney (Chipping Barnet)
Lansley, Andrew



Leigh, Edward


Chidgey, David
Letwin, Oliver


Clappison, James
Lewis, Dr Julian (New Forest E)


Clark, Rt Hon Alan (Kensington)
Lidington, David


Clarke, Rt Hon Kenneth (Rushcliffe)
Livsey, Richard



Lloyd, Rt Hon Sir Peter (Fareham)


Clifton-Brown, Geoffrey
Loughton, Tim


Collins, Tim
Luff, Peter


Cormack, Sir Patrick
MacGregor, Rt Hon John


Cotter, Brian
MacKay, Andrew


Cran, James
Maclean, Rt Hon David


Curry, Rt Hon David
Maclennan, Rt Hon Robert


Davey, Edward (Kingston)
McLoughlin, Patrick


Davis, Rt Hon David (Haltemprice)
Madel, Sir David


Donaldson, Jeffrey
Malins, Humfrey


Dorrell, Rt Hon Stephen
Maples, John


Duncan, Alan
Maude, Rt Hon Francis


Duncan Smith, Iain
Mawhinney, Rt Hon Sir Brian


Evans, Nigel
May, Mrs Theresa


Ewing, Mrs Margaret
Michie, Mrs Ray (Argyll  Bute)


Faber, David
Moore, Michael


Fabricant, Michael
Morgan, Alasdair (Galloway)


Fallon, Michael
Moss, Malcolm


Fearn, Ronnie
Nicholls, Patrick


Flight, Howard
Norman, Archie


Forth, Rt Hon Eric
Oaten, Mark


Foster, Don (Bath)
Öpik, Lembit


Fowler, Rt Hon Sir Norman
Ottaway, Richard


Fox, Dr Liam
Page, Richard


Fraser, Christopher
Paice, James


Garnier, Edward
Paterson, Owen


George, Andrew (St Ives)
Pickles, Eric


Gibb, Nick
Prior, David


Gill, Christopher
Randall, John


Gillan, Mrs Cheryl
Redwood, Rt Hon John


Gorman, Mrs Teresa
Rendel, David


Gorrie, Donald
Robathan, Andrew


Gray, James
Robertson, Laurence (Tewk'b'ry)


Green, Damian
Roe, Mrs Marion (Broxbourne)






Ross, William (E Lond'y)
Townend, John


Rowe, Andrew (Faversham)
Trend, Michael


Ruffley, David
Tyler, Paul


Russell, Bob (Colchester)
Tyrie, Andrew


St Aubyn, Nick
Wallace, James


Salmond, Alex
Walter, Robert


Sanders, Adrian
Wardle, Charles


Shephard, Rt Hon Mrs Gillian
Webb, Steve


Shepherd, Richard
Wells, Bowen


Simpson, Keith (Mid-Norfolk)
Welsh, Andrew


Smith, Sir Robert (W Ab'd'ns)
Whittingdale, John


Soames, Nicholas
Widdecombe, Rt Hon Miss Ann


Spelman, Mrs Caroline
Wigley, Rt Hon Dafydd


Spicer, Sir Michael
Wilkinson, John


Stanley, Rt Hon Sir John
Willetts, David


Steen, Anthony
Willis, Phil


Streeter, Gary
Wilshire, David


Stunell, Andrew
Winterton, Mrs Ann (Congleton)


Swayne, Desmond
Winterton, Nicholas (Macclesfield)


Syms, Robert
Woodward, Shaun


Tapsell, Sir Peter
Yeo, Tim


Taylor, Ian (Esher  Walton)
Young, Rt Hon Sir George


Taylor, John M (Solihull)



Taylor, Matthew (Truro)
Tellers for the Noes:


Taylor, Sir Teddy
Mr. Stephen Day and


Tonge, Dr Jenny
Mr. Nigel Waterson.

Question accordingly agreed to.

Motion made, and Question proposed,
That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to the amendment proposed by the Lords in lieu of the amendment in page 14, to leave out lines 31 to 49, and insisting on the amendments in page 14, to leave out lines 31 to 49, and page 22, to leave out lines 31 to 39.
That Mr. Damian Green, Mr. David Jamieson, Mr. Tony McNulty, Mr. Phil Willis and Mr. Brian Wilson be members of the Committee; that Mr. Brian Wilson be the Chairman of the Committee; that three be the quorum of the Committee; and that the Committee do withdraw immediately.—[Mr. Jamieson.]

Mr. Eric Forth: Mr. Deputy Speaker—

Mr. Deputy Speaker: Order. Before the right hon. Gentleman speaks, I should say that I shall be very firm in insisting that the rules of debate are observed. He may speak purely to this motion, and to this motion alone. If he deviates from the rules, I shall quickly be on my feet to remind him of them.

Mr. Forth: I would expect no less, Mr. Deputy Speaker. I assume that you would not always assume that the House would wish to nod through any motion, no matter how routine it may seem. It would therefore be useful to the House if we were to hear just a little bit more from the Government not only about the rationale for establishing the Committee—it is, after all, a debatable motion—but about the qualifications of the Committee membership, and, perhaps more specifically, about why the person suggested in the motion to serve as the Committee Chairman should be considered to be the ideal person to serve in that capacity.
It is possible that someone who might be thought to be more neutral should be appointed to serve as Chairman of the Committee, so that it might discharge its very important responsibilities in the most even-handed manner. Some reasoning for the proposed Committee membership and nomination of Chairman would be helpful to the House.
The other matter that would be worth clarifying in establishing the Committee is when the Committee might sit. In the past such Committees may well have sat immediately; I think that that is my recollection of such Committees.

Mr. Deputy Speaker: Order. The right hon. Gentleman does not have to discuss that matter—the motion says "immediately".

Mr. Forth: I have a concern about that, Mr. Deputy Speaker. We have heard quite a lot recently about the need for the House to sit reduced hours. Some anxiety has been expressed—by no less a person than the Leader of the House herself—that late-hours sitting is good neither for the House nor for the quality of our deliberations.

Mr. Deputy Speaker: Order. That has absolutely nothing to do with the motion. It is another matter, which has been put before the Leader of the House.

Mr. Forth: Mr. Deputy Speaker, you have said that the motion says that the Committee should sit immediately. I am querying that—I want to debate it—because the motion is debatable. I am seeking to enter into a debate on the advisability of the Committee meeting at this late hour, as I should be worried about the quality of the Committee's decision making if it meets at this late hour. I am setting that worry in the context of the remarks made recently by the Leader of the House. She has apparently said that she believes that the House should not sit at late hours. I assume that part of her reasoning—although we have not yet heard it in any detail—is that the House's quality of decision making might well be prejudiced if such decisions are made so late and if such Committees meet at such a late hour.

Mrs. Browning: My right hon. Friend will be aware that this debate started extremely late, as we were waiting upon the attendance of the Minister for Education and Industry, Scottish Office—

Mr. Deputy Speaker: Order. I have already stated that what has gone before has nothing to do with the motion. I will not have a discussion entered into about previous business that has been decided.

Mr. Forth: Indeed, Mr. Deputy Speaker, I am looking very much to the future and to the quality of decision making in the future. Looking at the clock, I see that it is a moderately late hour, so the House may wish to consider deferring the decision or deferring the setting up of the Committee until it can deliberate in a more reasoned way at a more respectable hour. These are perfectly rational points. I raise them because, from time to time, we find that apparently innocuous motions are brought before the House—perhaps not always at an hour such as this, but at a more reasonable hour—and there is an expectation that they should simply be nodded through.
Increasingly, I find that the concept of nodding motions through is a denial of the role of the House of Commons. It would be better if we were to hear more of a case put in favour of such motions. The Government Whip told the House what he was proposing in respect of the membership of the Committee, its chairmanship and so on, but we are entitled to a more in-depth explanation.

Mr. Nick St. Aubyn: Is my right hon. Friend worried that if we simply nod through such


motions, the credibility of the Committee's decisions will in some way be undermined in another place, and that unless we give due deliberation to the points that he has raised, in another place the Committee's decisions will not have the effect and persuasiveness that this House requires?

Mr. Forth: I am grateful to my hon. Friend for making those points. He might wish to elaborate on them if he were to catch your eye, Mr. Deputy Speaker. He raises those points in the context of our not having had a full explanation of the Committee's role. It would be useful if a member of the Government were to give us more of an explanation of the role envisaged for the Committee, and how it would provide a link between the proceedings of this House and the other place. Surely, that is vital to the proper progress of the business in hand.

Mr. Deputy Speaker (Mr. Michael Lord): Order. The role of the Committee is clearly stated in the motion.

Mr. Forth: The Order Paper refers to
Consideration of a Lords Amendment in lieu of a Commons Amendment and of a Reason for disagreeing to a Commons Amendment.
That does not explain to me the role of the Committee. I should have thought that those words meant that we were considering the words spoken by the Government Whip in explaining the background to the Committee, but he did not elaborate on the nature of the role of the Committee, were it to be set up at this late hour and with the membership and Chairman that he proposed.

Mrs. Eleanor Laing: rose—

Mr. Forth: I shall give way to my hon. Friend the Member for Epping Forest (Mrs. Laing); then I want to conclude my remarks.

Mrs. Laing: On the point about the proposed Chairman of the Committee, given that the Reasons Committee is a Select Committee of the House, does my right hon. Friend agree that it would be more reasonable if the Chairman whom the House is about to appoint had some impartiality on the subject before the Committee? The proposed Chairman—the Minister for Education and Industry, Scottish Office—has shown himself to be anything but impartial.

Mr. Forth: Again, that is a very important point. It is perhaps not for me to elaborate on it at this stage. I see that my hon. Friends have given much thought to the motion—more perhaps than I have been able to. Perhaps they will want to expand on these points if they catch your eye, Mr. Deputy Speaker.
The House might want to reconsider the chairmanship of the Committee, to which I alluded briefly when I began, for exactly the reason that my hon. Friend the Member for Epping Forest has given. I am grateful to her for bringing to my attention and to that of the House the fact that the Committee would have the status of a Select Committee. That is an important new fact. Given that a

number of Select Committees are chaired by people other than Labour Members or Ministers, there must surely be a strong case—

Mr. Deputy Speaker: Order. The hon. Gentleman must not embark on a dissertation on Select Committees. The motion before the House is very specific, and I would be grateful if he would address it.

Mr. Forth: I am grateful for your guidance, Mr. Deputy Speaker, but the Whip read out the proposed members of the Committee, including the proposed Chairman—the Minister for Education and Industry, Scottish Office—who took part in the debate and can hardly be described as impartial. It is just possible that, for the sake of giving the fullest credibility to the Committee, which forms a key bridge between the proceedings of the House and those of another place, the House may want to consider a different candidate for its chairmanship.

Mr. Geoffrey Clifton-Brown: Is my right hon. Friend aware that until his present appointment, and particularly in opposition, the Minister for Education and Industry, Scottish Office had no educational appointments whatever—

Mr. Deputy Speaker: Order. Mr. Forth.

Mr. Forth: I might have guessed that the Minister had no previous educational experience, but I am grateful to my hon. Friend for confirming that.
In conclusion, the House must consider the matter seriously. We cannot take such decisions on the nod at this late hour. I am asking the Government for further elaboration—

Mr. Gerald Bermingham: On a point of order, Mr. Deputy Speaker. The right hon. Gentleman has been a Minister—albeit a bad one—and knows the rules. He knows full well that it is normal procedure to appoint a Committee of the House. It has always been that way, so why is he delaying the Bill's progress?

Mr. Deputy Speaker: That is not a point of order for the Chair.

Mr. Forth: Indeed. I hope that the House will not accept the arrogance shown by that point, which assumes that a matter which is properly debatable can be swept to one side and taken as read and that we can proceed with business. Surely the point is that the motion is properly debatable in the House. I wish to initiate a short debate on it so that the Government can elaborate on the points that I have sought to raise. I hope that at least I will have succeeded in that.

Mr. St. Aubyn: I wish to elaborate on the point on which my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) asked me to comment.
I understand that, as the Bill started in another place, if the amendments that we are asking Members of another place to consider are rejected by them and they are


minded to refuse the will of this House, it could fail entirely in the current Session. It is particularly important that the constitution and credibility of the Committee is beyond reproach. If it is not, and if in another place many independent minds address themselves to the points that have been raised, the will of the House, as expressed tonight, will fail. Therefore, the points that my right hon. Friend raised are not delaying tactics; they go to the heart of the matter—whether or not the House is serious about the arguments put forward this evening; whether it is serious about trying to influence another place; and whether it seriously cares whether the Bill, which started in another place, is completed this Session.
You will advise me, Mr. Deputy Speaker, but I believe that we should consider whether it is material that the Bill should be completed this Session.

Mr. Deputy Speaker: That is not what we are debating now.

Mr. St. Aubyn: I am grateful for your guidance, Mr. Deputy Speaker.
My right hon. Friend has made the important point that we do not have an impartial Chairman and, given the independence of mind of those in another place, that will not help the passage of the Bill.

Mr. Wilson: The right hon. Member for Bromley and Chislehurst (Mr. Forth) asked why the Reasons Committee was being set up. The House has twice voted overwhelmingly to reverse Lords amendments and send business back to the Lords. As he may have gleaned during his years in the House, that is done by referring the issue to the Reasons Committee. It is the norm that the Minister who has spoken in the debate chairs the Committee. The issue is as simple as that. I do not think that the right hon. Gentleman suffers from any particular problems of comprehension. His behaviour is entirely up to him, but I suggest that the charade that he has initiated is not in anyone's interests and that we should now get on with the business of the House and appoint the Reasons Committee.

Mr. David Wilshire: rose—

Mr. Deputy Speaker: The Question is—

Mr. Wilshire: On a point of order, Mr. Deputy Speaker. I was trying to catch your eye—

Mr. Deputy Speaker: We have moved on from that.

Mr. Forth: On a point of order, Mr. Deputy Speaker. My reading of the Order Paper suggests that the matter can be debated until any hour. Although the Minister has spoken early in the debate, it should be quite proper for

other hon. Members to seek to catch your eye. There is no time limit on the debate. The fact that the Minister has spoken surely cannot bring the debate to an end.

Mr. Deputy Speaker: I call Mr. David Wilshire.

Mr. Wilshire: Are your calling me on a point of order, Mr. Deputy Speaker, or are you calling me to speak?

Mr. Deputy Speaker: I am calling the hon. Member to speak.

Mr. Wilshire: Thank you, Mr. Deputy Speaker. I am most grateful to you for giving me the opportunity to speak.
Labour Members should not believe that we are not prepared to have a constructive debate on an important matter. We have had a contribution from the Minister, but I was not clear whether he was intervening on my hon. Friend the Member for Guildford (Mr. St. Aubyn) or whether my hon. Friend had finished and the Minister was making his speech. Will the Minister answer the legitimate questions that my right hon. and hon. Friends have asked and the questions that I would like to ask? I shall be happy to give way if someone would like to give me an assurance that we shall hear a constructive contribution from the Government in response to the points that have been made.
The Minister did not tell us why the particular names have been proposed. I understand why my hon. Friend the Member for Ashford (Mr. Green) is to be on the Committee, if the House approves it, but I do not understand the reasons for the selection of the other names. I should be most grateful if someone could explain why each of those hon. Members has been selected and why they are considered the experts who can draw up a list of reasons on behalf of the whole House that we can send to the other place.
I am also interested to know not only why those hon. Members have been chosen, but why others have been rejected. Many Labour Members have great knowledge of the issues that have been debated. It is important for us to be told whether those who have been chosen represent a balanced ticket.

Mr. St. Aubyn: Does my hon. Friend agree that the Minister's cursory remarks will undermine the credibility of the Committee in the eyes of another place? We are seeking a more detailed response and analysis—

Mr. Deputy Speaker: Order. The hon. Gentleman has already made that point more than once.

Mr. Wilshire: My hon. Friend the Member for Guildford is absolutely right. It is important that, when justification is given for the names that the Government have put forward, it is explained whether the names constitute a balanced ticket. We have heard members of all parties express substantial reservations about the arguments advanced by the Government Front-Bench team. It is important that somebody like the hon. Member for Falkirk, West (Mr. Canavan) should be on that Committee, because he seems to have a much stronger grasp of the problems than the Minister or, as far as I can see, any of the other Labour Members proposed.

Mrs. Browning: My hon. Friend will be aware that I sat in the Chamber throughout the previous debates,


although I did not speak. Does he believe that the hon. Members on the Committee should at the very minimum have heard tonight's debate?

Mr. Wilshire: I am sure that my hon. Friend is absolutely right. Perhaps I should add that to the list of questions, so that we may make absolutely certain that everyone who serves on the Committee has sat through the entire debate and knows about all the issues that must be addressed. I should be very grateful for an explanation about the names.
There is one other issue with which we need to deal: the Chairman. It has been asked whether the Minister for Education and Industry is the right person for the job, because he is tired. Is he tired? The poor hon. Gentlemen has been dragged all the way back from Inverness. He was late getting here, he has been under a great deal of stress, and I worry for his health. I worry that he might be clapped out and, therefore, somebody else should be chosen.

Mr. Deputy Speaker: Order. I remind the hon. Gentleman that the procedures that we are adopting are routine for such an issue. The reasons that he is giving for not agreeing with the motion are, as far as I can see, rather thin.

Mr. Wilshire: I understand exactly your point, Mr. Deputy Speaker. Although the matter can very easily be seen as routine, it is far from it when the person proposed to chair the Committee has been dragged back from Inverness. I suspect that this might even be a unique occasion. The matter needs some consideration. I hope that someone on the Government Front Bench will be able to assure us that a Minister who has had a tiring day and has worked hard can, just before midnight, chair a Committee that must do a responsible job. I look forward to the answer to that.
We must also be told what issues the Committee intends to address. All sorts of issues have been raised tonight. We know what the two motions and the decisions were; the Committee has to draw up reasons. We need to be reassured that the Committee members have a grasp of every issue that was raised tonight—

Mr. Deputy Speaker: Order. That is not what we are talking about. The hon. Member is straying very wide of the point, and I should be grateful if he returned to the precise motion before the House.

Mr. Wilshire: I entirely understand your point, Mr. Deputy Speaker. May I therefore ask just one other question? We need to be told what will happen if the Committee gets it wrong. If its members have not grasped the issues, and they draw up a list of reasons—

Mr. Deputy Speaker: Order. That does not concern the motion before the House, to which the hon. Member must return precisely.

Mr. Wilshire: I thought—

Mrs. Laing: Will my hon. Friend give way?

Mr. Wilshire: Of course.

Mrs. Laing: Might my hon. Friend consider proposing—[HON. MEMBERS: "Face the Chair."] Might he

consider proposing that, rather than the Chairman of the Committee being the Minister for Education and Industry—

Mr. Deputy Speaker: Order. No, he may not. It is not possible for the hon. Member for Spelthorne (Mr. Wilshire) to make such decisions.

Mr. Wilshire: I again understand your point, Mr. Deputy Speaker. I wish to co-operate not only with you but with the entire House. My hon. Friends have asked a list of questions, to which I have added. I hope that, in the spirit of constructive debate, which we Opposition Members have observed, we shall not witness the Government ignoring the sensible points, rolling out their majority and hoping that the matter will go away. These are serious and important points and legitimate questions that the Government need to answer. I look forward to hearing what they have to say.

The Parliamentary Secretary to the Treasury (Mr. Nick Brown): rose in his place and claimed to move, That the Question be now put.

Question put, That the Question be now put:—

The House proceeded to a Division—

Mr. Deputy Speaker: There seems to be some delay in the No Lobby. I would be grateful if the Serjeant at Arms would investigate.

The House having divided: Ayes 269, Noes 11.

Division No. 325]
[11.54 pm


AYES


Alexander, Douglas
Chaytor, David


Allan, Richard
Chisholm, Malcolm


Allen, Graham
Clapham, Michael


Anderson, Janet (Rossendale)
Clark, Dr Lynda (Edinburgh Pentlands)


Armstrong, Ms Hilary



Atkins, Charlotte
Clark, Paul (Gillingham)


Banks, Tony
Clarke, Charles (Norwich S)


Battle, John
Clarke, Tony (Northampton S)


Bayley, Hugh
Clelland, David


Bermingham, Gerald
Coaker, Vernon


Betts, Clive
Coffey, Ms Ann


Blears, Ms Hazel
Coleman, Iain


Blizzard, Bob
Colman, Tony


Borrow, David
Connarty, Michael


Bradley, Keith (Withington)
Corston, Ms Jean


Bradley, Peter (The Wrekin)
Cotter, Brian


Bradshaw, Ben
Cousins, Jim


Brown, Rt Hon Nick (Newcastle E)
Cranston, Ross


Brown, Russell (Dumfries)
Crausby, David


Browne, Desmond
Cummings, John


Bruce, Malcolm (Gordon)
Cunliffe, Lawrence


Buck, Ms Karen
Cunningham, Jim (Cov'try S)


Burden, Richard
Dalyell, Tam


Burgon, Colin
Darvill, Keith


Burnett, John
Davey, Valerie (Bristol W)


Butler, Mrs Christine
Davidson, Ian


Byers, Stephen
Davies, Geraint (Croydon C)


Caborn, Richard
Davies, Rt Hon Ron (Caerphilly)


Campbell, Alan (Tynemouth)
Dean, Mrs Janet


Campbell, Mrs Anne (C'bridge)
Dismore, Andrew


Campbell, Menzies (NE Fife)
Dobbin, Jim


Canavan, Dennis
Dobson, Rt Hon Frank


Caplin, Ivor
Donohoe, Brian H


Casale, Roger
Drew, David


Cawsey, Ian
Eagle, Angela (Wallasey)


Chapman, Ben (Wirral S)
Eagle, Maria (L'pool Garston)






Ellman, Mrs Louise
Kirkwood, Archy


Ennis, Jeff
Kumar, Dr Ashok


Ewing, Mrs Margaret
Ladyman, Dr Stephen


Fearn, Ronnie
Lepper, David


Fisher, Mark
Leslie, Christopher


Fitzsimons, Lorna
Lewis, Ivan (Bury S)


Follett, Barbara
Lewis, Terry (Worsley)


Foster, Don (Bath)
Liddell, Mrs Helen


Foster, Michael Jabez (Hastings)
Linton, Martin


Foster, Michael J (Worcester)
Lloyd, Tony (Manchester C)


Gapes, Mike
Lock, David


Gardiner, Barry
Love, Andrew


George, Andrew (St Ives)
McAllion, John


Gibson, Dr Ian
McAvoy, Thomas


Gilroy, Mrs Linda
McCabe, Steve


Godman, Dr Norman A
McCafferty, Ms Chris


Goggins, Paul
McCartney, Ian (Makerfield)


Golding, Mrs Llin
McDonnell, John


Gordon, Mrs Eileen
McFall, John


Gorrie, Donald
McGuire, Mrs Anne


Griffiths, Jane (Reading E)
McIsaac, Shona


Griffiths, Win (Bridgend)
McKenna, Mrs Rosemary


Grocott, Bruce
Mackinlay, Andrew


Grogan, John
McNulty, Tony


Gunnell, John
MacShane, Denis


Hain, Peter
Mactaggart, Fiona


Hall, Mike (Weaver Vale)
Mallaber, Judy


Hall, Patrick (Bedford)
Marsden, Paul (Shrewsbury)


Hamilton, Fabian (Leeds NE)
Marshall-Andrews, Robert


Hanson, David
Meacher, Rt Hon Michael


Harris, Dr Evan
Meale, Alan


Heal, Mrs Sylvia
Merron, Gillian


Healey, John
Michael, Alun


Heath, David (Somerton  Frome)
Milburn, Alan


Henderson, Doug (Newcastle N)
Miller, Andrew


Hepburn, Stephen
Moffatt, Laura


Heppell, John
Moore, Michael


Hill, Keith
Moran, Ms Margaret


Hodge, Ms Margaret
Morgan, Alasdair (Galloway)


Hoon, Geoffrey
Morgan, Ms Julie (Cardiff N)


Hope, Phil
Morgan, Rhodri (Cardiff W)


Howells, Dr Kim
Morley, Elliot


Hoyle, Lindsay
Morris, Ms Estelle (B'ham Yardley)


Hughes, Ms Beverley (Stretford)
Murphy, Denis (Wansbeck)


Hughes, Kevin (Doncaster N)
Murphy, Jim (Eastwood)


Hughes, Simon (Southwark N)
Norris, Dan


Humble, Mrs Joan
O'Brien, Bill (Normanton)


Hurst, Alan
O'Hara, Eddie


Iddon, Dr Brian
Olner, Bill


Illsley, Eric
O'Neill, Martin


Jackson, Ms Glenda (Hampstead)
Öpik, Lembit


Jackson, Helen (Hillsborough)
Osborne, Ms Sandra


Jamieson, David
Palmer, Dr Nick


Jenkins, Brian
Pearson, Ian


Johnson, Miss Melanie (Welwyn Hatfield)
Perham, Ms Linda



Pickthall, Colin


Jones, Mrs Fiona (Newark)
Pike, Peter L


Jones, Martyn (Clwyd S)
Plaskitt, James


Jowell, Ms Tessa
Pond, Chris


Keeble, Ms Sally
Pope, Greg


Keen, Alan (Feltham  Heston)
Pound, Stephen


Keen, Ann (Brentford  Isleworth)
Prentice, Ms Bridget (Lewisham E)


Kennedy, Charles (Ross Skye)
Prentice, Gordon (Pendle)


Kennedy, Jane (Wavertree)
Primarolo, Dawn


Kidney, David
Prosser, Gwyn


King, Andy (Rugby  Kenilworth)
Purchase, Ken





Quin, Ms Joyce
Taylor, Rt Hon Mrs Ann (Dewsbury)


Quinn, Lawrie



Rammell, Bill
Taylor, Ms Dari (Stockton S)


Rapson, Syd
Thomas, Gareth (Clwyd W)


Reed, Andrew (Loughborough)
Thomas, Gareth R (Harrow W)


Reid, Dr John (Hamilton N)
Timms, Stephen


Rendel, David
Tipping, Paddy


Robertson, Rt Hon George (Hamilton S)
Todd, Mark



Touhig, Don


Roche, Mrs Barbara
Truswell, Paul


Rooker, Jeff
Turner, Dr Desmond (Kemptown)


Rooney, Terry
Turner, Dr George (NW Norfolk)


Ross, Ernie (Dundee W)
Twigg, Derek (Halton)


Roy, Frank
Tyler, Paul


Russell, Bob (Colchester)
Vaz, Keith


Russell, Ms Christine (Chester)
Vis, Dr Rudi


Ryan, Ms Joan
Wallace, James


Salmond, Alex
Ward, Ms Claire


Savidge, Malcolm
Wareing, Robert N


Sawford, Phil
Watts, David


Singh, Marsha
Webb, Steve


Smith, Rt Hon Andrew (Oxford E)
Welsh, Andrew


Smith, Angela (Basildon)
White, Brian


Smith, Rt Hon Chris (Islington S)
Whitehead, Dr Alan


Smith, Miss Geraldine (Morecambe  Lunesdale)
Wicks, Malcolm



Willis, Phil


Smith, Llew (Blaenau Gwent)
Wills, Michael


Smith, Sir Robert (W Ab'd'ns)
Wilson, Brian


Southworth, Ms Helen
Winnick, David


Spellar, John
Winterton, Ms Rosie (Doncaster C)


Squire, Ms Rachel
Woolas, Phil


Stewart, David (Inverness E)
Wright, Anthony D (Gt Yarmouth)


Stewart, Ian (Eccles)
Wright, Dr Tony (Cannock)


Stringer, Graham



Stuart, Ms Gisela
Tellers for the Ayes:


Stunell, Andrew
Mr. Jim Dowd and


Sutcliffe, Gerry
Mr. Robert Ainsworth.


NOES


Amess, David
Robertson, Laurence (Tewk'b'ry)


Clifton-Brown, Geoffrey
Ross, William (E Lond'y)


Howarth, Gerald (Aldershot)
St Aubyn, Nick


Johnson Smith, Rt Hon Sir Geoffrey
Widdecombe, Rt Hon Miss Ann


Laing, Mrs Eleanor
Tellers for the Noes:


Lewis, Dr Julian (New Forest E)
Mr. Eric Forth and


Maclean, Rt Hon David
Mr. David Wilshire.

Question accordingly agreed to.

Main Question put accordingly, and agreed to.

Reasons for disagreeing to a Lords amendment and insisting on certain Commons amendments reported, and agreed to; to be communicated to the Lords.

Orders of the Day — ESTIMATES

Motion made, and Question put forthwith, pursuant to Standing Order No. 145 (Liaison Committee),
That this House agrees with the Report [25th June] of the Liaison Committee.—[Mr. Pope.]

Question agreed to.

Orders of the Day — Housing Costs (Welfare Benefits)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pope.]

12.9 am

Mr. David Kidney: I am pleased to start this short debate on housing costs and the reform of welfare benefits. The Government's review of housing benefit has been on-going for some time, and I want tonight to tease out of the Minister some suggestion of the review's likely conclusions.
My starting point is the Treasury Select Committee's report into this year's Budget. It said:
We are concerned about the number of families remaining on a high marginal rate of tax, and hope that reviews of housing benefit and Council Tax benefit will contribute to a reduction in the incidence of high marginal rates.
That was said in the context of the new working families tax credit, which makes a significant contribution to the Budget's redistributive nature. It is a far superior benefit to the existing family credit, as it gives a greater allowance—£2.50 more than currently—for children under 11, it generously helps with child care costs and credit begins to be withdrawn at £90 rather than £79. Moreover, the rate of withdrawal of the credit for every extra £1 of net income—the so-called taper—is at 55p, rather than 70p, in the pound.
Those on housing benefit still have an overlap, whereby they face an effective rate of tax of 89 per cent. If they also receive council tax benefit, the rate is as high as 95.3 per cent. Some 260,000 families still face marginal rates of tax of more than 70 per cent., and more than 1 million families face a marginal rate of more than 60 per cent.
I welcome the Government's response—published today—to the Select Committee report. It said:
The Government will continue to take work incentives into account in the comprehensive spending and welfare reform reviews.
It has taken the Labour Government to end marginal rates of tax of more than 100 per cent., which were shameful and endured for far too long.
I recognise that the review of housing benefit, the new working families tax credit and the comprehensive spending review will have to interact to reach a whole and satisfactory outcome. I am hopeful that, when the results of the comprehensive spending review are announced, housing will be a major beneficiary, and that there will be a welcome boost to investment in the building of more social housing and the renovation of housing of all tenures.
This debate on housing benefit reform is timely, as it falls in the shadow of the announcement of the review's results. Moreover, two significant reports have been issued this week: first, Steve Wilcox's report for the National Housing Federation, whose title is, I believe, "Unfinished Business"; and secondly, Peter Kemp's report for the Joseph Rowntree Foundation, which is called "Housing Benefit: Time for Reform".
I believe that the key objectives in housing benefit reform should be: first, to reinforce the Government's message that work pays; secondly, to support the excellent new working families tax credit; and thirdly, to avoid

unrealistic demands on public spending. On the first objective, 50,000 families will be floated off housing benefit altogether through the very generous working families tax credit, which will remove them from the pernicious poverty trap—indeed, 70,000 people will also be floated off council tax benefit. Working families tax credit will help low-paid owner-occupiers as well as tenants. However, for tenants, the overlap of housing benefit still means that families are caught by high marginal tax rates—the generosity of the working families tax credit means that it will catch more people higher up the income scale. It could be said that the poverty trap becomes slightly less deep but much wider.
Working families tax credit is an exciting new support for working families, but if changes are not made to housing benefit, the two systems will continue to overlap, with high marginal tax rates well up the income scale. That confusing overlap and the high marginal rates will distort the Government's message that work pays. A harmonised system offers opportunities to deliver that message clearly, and could create savings in administration costs and reduce the scope for fraud.
Housing benefit already costs this country £12 billion a year; within a budget of that size there is scope for radical reform without extra expenditure. Helping people back to work means fewer benefit claimants and greater income tax and national insurance receipts. Helping people in work to earn higher wages means lower benefit payments and, again, greater income tax and national insurance receipts. It would be a tremendous additional benefit if a new scheme could bring help across housing tenures and end the system of poor council tenants paying what is now a total of £1.3 billion a year to help the poorest tenants with their rents.
The previous Government's shift in support from bricks and mortar to personal benefit payments went too far: so far that cuts had to be made. The local reference rent was introduced, restricting the amount of rent that was eligible for housing benefit support, as were the single room rent for under-25s, and a tight means test that hit pensioners with modest savings.
The local reference rent has already caused a 12 per cent. reduction in the number of housing benefit claimants: 130,000 people and their families with private sector tenancies no longer claim. Without reform, there is a danger that more and more people will be let down, with social exclusion increasing instead of decreasing.
There is scope for action to stem the steep rise in rents that has gone alongside the increase in the use of housing benefit to take the strain. Social housing grant rates for housing associations could be used, there could be better support for local authorities, and we could rein in the private sector consumption of public money, especially in the area of fraudulent claims.
Since 1990, the grant to housing associations for new build has reduced from 75 per cent. to 54 per cent. Rents have, of course, risen in consequence. Three quarters of all new housing association lettings of two-bedroom properties in England are at rents of more than £50 a week, and 45 per cent. are at more than £60. Seven out of every eight lettings of three-bedroom houses are at rents of more than £50 a week, and 70 per cent. at more than £60.
The Minister for Local Government and Housing wrote to the Housing Corporation in August 1997:
I am looking for a reduction in the average level of rent charged over a 3 year period of about 4% in real terms. Rents on new schemes have now reached a level where it is questionable whether they are affordable to those in low-paid employment without assistance from HB.
The Government will have to contribute to such a commendable strategy through their decisions on social housing grant rate. If they hold it at the present 54 per cent., it could benefit tenants by £5 a week. They should especially bear in mind the argument about interest rates, which have risen over the past year, whereas they argued that the last reduction in housing association grant was partly because the rates had fallen.
An answer to a parliamentary question earlier this Session showed that the net cost of a 10 per cent. reduction in council rents was estimated at £100 million a year. That is surely a modest cost for a rent restraint that would bear directly on family concerns about moving from benefit to work. There might also be a case for trying over time to achieve a more coherent structure for council and housing association rents.
As for private lettings, I accept that there is no prospect of direct rent controls in the future, but the Government are spending a good deal of public money on buying private rented accommodation for families. Surely there ought to be some scope for using that buying power to secure localised standards in such areas as health and safety, safeguards against fraud and, perhaps, rent levels that housing benefit will support.
There are currently some good examples of public-private partnerships in housing, partly owing to the good work done by the Empty Homes Agency in prompting councils and private landlords to work together. Stafford borough council, for instance, now has very good arrangements for co-operation with all housing stakeholders. That council, along with the university accommodation office and private landlords, has a scheme for agreed standards on safety, energy efficiency and inspections of properties. For tenants who cannot afford to pay deposits, there is a rent assistance scheme, as well as fast-tracking of housing benefit applications.
Important decisions are about to be made about housing benefit. I hope that we can remove the messy overlap of scheme tapers that currently produces the worst-case poverty trap. There is a strong case for combining policies on rent restraint and benefit harmonisation. I believe that any changes should ensure that the system of support with housing costs helps those in need, eliminates fraud as far as possible, makes work pay, and supports the Government's new working families tax credit.
I hope that I have contributed to an important debate about housing costs and welfare benefit in the future.

Mr. Steve Webb: I congratulate the hon. Member for Stafford (Mr. Kidney) on obtaining the debate, and thank him for allowing me to speak briefly.
So far, housing has not been integrated into the new working families tax credit. The hon. Gentleman made a number of sensible and perceptive points about rent

levels, and about the importance of such integration. I think that part of the reason why the tax and benefit system for low-paid workers is in such a mess is that it has developed in a piecemeal way over decades. It would be regrettable if the Government made the same mistake—if they introduced a tax credit, and then dealt with housing quite separately.
In the spirit of what the hon. Gentleman said, the Liberal Democrats—and I personally—would welcome the inclusion of rent in the working families tax credit system. For example, a £20 credit would knock £20 off the amount of rent giving eligibility for housing benefit, would reduce the number of people on housing benefit and would reduce the overlapping tapers to which the hon. Gentleman referred. It would be interesting to hear from the Minister whether the Government are thinking of such action.
The hon. Gentleman rightly said that low-paid owner-occupiers would benefit from the tax credit, but nothing in the tax credit relates explicitly to their mortgage interest costs. Earlier this week, I heard the Minister for Local Government and Housing say on the radio that she wanted building societies to provide mortgage insurance for times when such people are unemployed. That may well be laudable, and appropriate for some; but it underlines the fact that such people, when they take a job, should not suddenly lose all assistance with their mortgage costs.
If the Housing Minister is successful and unemployed people's mortgage costs are paid in full, they could amount to £400 or £500 a month. If those people then benefited from a tax credit that involves no allowance—because they are buying, and buying is the majority tenure—that would constitute a serious gap in the benefits system, and one that survey evidence suggests is a barrier to moving out of welfare and into work.
I would be grateful if the Minister could tell us whether a rental credit is likely to be included in the working families tax credit, and, more important, whether he would consider introducing an owner-occupiers' mortgage interest credit.

The Parliamentary Under-Secretary of State for Social Security (Mr. Keith Bradley): I congratulate my hon. Friend the Member for Stafford (Mr. Kidney) on obtaining the debate. It is clear from his speech that he takes a keen interest in the issues, and his speech raised a number of important matters—as did that of the hon. Member for Northavon (Mr. Webb).
The easy response to the rapidly escalating housing benefit bill of recent years would be to embark on a series of piecemeal cuts, as did the last Administration. My hon. Friend clearly identified those cuts.
That has not been our response. Instead, we have recognised the need for joined-up solutions to joined-up problems. We recognise the key interrelationship between housing benefit and the housing policy that it underpins. That is why we have embarked on a joint review with the Department of the Environment, Transport and the Regions. The first stage of that review was to put the existing scheme under the microscope to identify where the faults lay. In fact, the microscope analogy is not a good one as many of the problems are all too clear to the naked eye.
I shall concentrate my response on four main problems, but I shall carefully consider other points raised in the debate and shall respond more fully if I do not cover them tonight. First, instead of easing the transition from welfare into work, housing benefit frequently acts as an insurmountable barrier to people taking up job opportunities. Secondly, benefit recipients rarely have any shopping incentive to choose the most appropriately sized property, or to find better value housing. Thirdly, there are stark inequalities between the treatment of private and social tenants. In recent years, private sector recipients have borne the brunt of measures introduced to make savings in the escalating housing benefit bill. Finally, while some local authorities administer the benefit well, others perform badly. The resulting inconsistencies and delays compound the work incentive problem, and cause difficulties for tenants and landlords alike.
I described those as the main problems, which implies that there are others. I want to mention two: the estimated £1 billion of housing benefit lost to fraudsters every year, and widespread misunderstanding of the housing benefit system.
First, widespread fraud deflects money from the people who really need it and contributes towards the poor image that most people associate with the scheme. There can be no doubt that the present hotch-potch of rules, combined with inefficient links between the Benefits Agency and local authorities, provides a fertile breeding ground for fraud.
Secondly, the widespread misunderstanding surrounding the details of the benefit means that many claimants are simply unaware that housing benefit is payable to people in low-paid work, and that contributes to the work incentive problem that so many commentators have highlighted.
These problems are not new, but it would be wrong to continue our analysis without pausing to reflect on the good points of housing benefit. It offers a high degree of security for individuals and families. Although the British scheme has operated primarily as an instrument of income maintenance, it also enables most people to afford acceptable accommodation. Overall, however, it is easier to criticise the current scheme than to find ways of overcoming all its difficulties while still retaining the good points.
I attended the launch yesterday of "Housing Benefit: Time for Reform", a report written by Professor Peter Kemp, and of Steve Wilcox's report "Unfinished Business", both of which were mentioned by my hon. Friend the Member for Stafford. I was particularly impressed by Professor Kemp's exploration not just of the problems of the current scheme but of a comprehensive range of possible solutions. His analysis of alternatives to the current scheme ranged refreshingly wide, and went beyond the deceptively simple solution of simply reducing rents.
My hon. Friend drew attention to the importance of work incentives and the part that housing benefit can play in improving them. This must be a linchpin for any reforms. We have already begun the task of changing expectations, to make sure that a welfare pension for life is not an option for those who can work.
Secondly, we have started to address the ignorance of housing benefit that prevents some people from taking up work because they are unaware of the in-work help that

is available. One of the speakers at yesterday's conference highlighted the need to give tailored advice if we are ever to deal with ignorance.
The new deal has replaced the old, mass-produced benefit delivery with a more flexible, personally tailored service. Participants are given help and advice on the full range of benefits that they could claim and how much they will get when they move into employment. We have recently launched a comprehensive advertising campaign targeted at lone parents and other low-income families to highlight the full range of benefits and assistance available to people in work.
My hon. Friend the Member for Stafford is right to draw attention to the importance of the new working families tax credit, which was also mentioned by the hon. Member for Northavon. This, combined with other measures announced in the Budget, will increase the rewards of work. The changes already announced mean that the number of people on deduction rates of more than 90 per cent. will reduce from 130,000 to 26,000. However, a small number of tenants in receipt of housing benefit, council tax benefit and the new tax credit could still lose up to 95p in the pound of any additional earnings. There is clearly scope for improving the part that housing benefit plays in supporting low-income workers.
Some commentators suggest that integrating housing support with the new housing tax credit would
create clear water between benefit and work.
They also point out the danger of making it harder for claimants to leap between the worlds of welfare and work. It is certainly a very interesting proposal and one that has already been put to the review team, but we must strike a note of caution about creating different systems of support for tenants in and out of work. Even if a housing credit was anchored to both tenure and place of residence, it might still make life on benefits seem more secure compared with a credit that cannot be guaranteed to meet individual rent liabilities.
Giving tenants a direct stake in the cost of their housing, either through a gap scheme such as those operated in many other countries or through a notional rent contribution for council tenants, could be one way to tackle the gulf between welfare and work. As my hon. Friend the Member for Stafford made clear, the key message must be that work pays. All those matters will be given careful consideration.
There are finely balanced sets of pros and cons for the different schemes, and we must consider them as our reforms come forward, but reform aimed at giving tenants an interest in their rent would not take place in a vacuum. One aspect of the background canvas painted by Professor Kemp in his report is that basic social security benefits are unusual internationally in making no provision for housing cost. That is a problem that we have to continue to grapple with. We must also recognise that some vulnerable tenants may be unable to shop around or haggle with their landlords. Alternatively, the costs of giving tenants some slack to make up any rent shortfall could be substantial. There is also the danger that a gap scheme would prove to be equally complicated to run and even more opaque for claimants to understand than the current system.
That brings me to improved administration. There can be no doubt that standards of administration are patchy across local authorities. Numerous changes have been


bolted on to the original scheme, leaving us with a benefit confusing even for the best local authorities to administer, let alone for claimants to understand. As my hon. Friend the Member for Stafford rightly said, the Public Accounts Committee report majored on the complexity of housing benefit, referring several times to the
60 deductions, premiums, allowances and disregards
involved in calculating entitlement. They relate largely to the structure that housing benefit shares with income support and overlook probably the biggest headache in housing benefit administration—the way that rent is assessed.
Again there is no easy solution; the complexity in the system has mostly been built in to save money, to protect tenants in vulnerable circumstances, such as young people who have been in care, or to prevent fraud and abuse. Nevertheless, the case for reducing some of the worst complexities is extremely robust. We will also continue to build on the verification framework and the findings of the benefit fraud inspectorate to disseminate good practice and to raise standards.
I should also like to address the issue of cost. Many commentators assume a backdrop of cost-cutting or restraint. If savings are to be squeezed out of the social security budget, housing benefit initially looks like a prime candidate. After all, it has shown the second fastest rate of growth after sickness and disability benefits in recent years.
Despite spending on housing remaining broadly constant, benefit spending has rocketed, from around £5.3 billion in 1988 to around £11.4 billion today. While we are aiming to restrain growth in the longer term, the review is not a cost-driven exercise. I made the same point yesterday morning at the launch of Professor Kemp's report, and a number of people in the audience immediately assumed that that was a politician's

doublespeak and that I was actually on the verge of announcing cuts in housing benefit. Let me reiterate that the review is not about cuts. For the immediate future, we are more interested in streamlining the rules and in making the benefit more work-friendly.
Finally, my hon. Friend mentioned the balance between bricks and mortar and personal subsidy. I can see that this approach has its attractions, but lowering rents in the social housing sector is no panacea in itself. Rent reductions do not, for instance, increase the supply of accommodation or improve the quality and maintenance of the existing stock.
In conclusion, some of the general points are worth reiterating. There are features of the current system that go against the grain of the Government's determination to refashion a modern welfare state. In particular, housing benefit can undermine work incentives and prevent tenants from taking responsibility for housing consumption. Any changes must be designed to simplify the benefit rules, to ensure that the benefit acts in concert with other in-work support and to design out fraud wherever possible. We must always remember that many people rely on benefit for their security, and that any change will not be brought in without sensitivity, in order to ensure that existing claimants have what I call a soft landing.
I warmly congratulate my hon. Friend and the hon. Member for Northavon again on their contributions to the debate. The points raised will be considered carefully as the review progresses. I hope that we can build support both for the principles of general welfare reform and for tackling the specific design faults of the housing benefit system that have been so clearly identified tonight. I am sure that, if we work together in that way, we can produce a better housing support system than the one with which we are currently grappling.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes to One o'clock.